Bank of Scotland is upbeat

BANK of Scotland said yesterday its first-half pre-tax profits rose by 24 per cent to £324.3 million sterling, beating analysts' forecasts of between £283 million and £305 million.

It raised its dividend by 18.8 per cent to 2.91p a share from 2.45p, saying it continued to gain market share in Britain and that the picture in most of its markets remained bright.

Analysts said they were likely to upgrade full-year profit forecasts to around £650 million/£660 million after seeing the first-half performance.

"They beat expectations on income and on the costs side but that was slightly offset by some disappointment by the performance of BankWest," HSBC James Capel banking analyst, Mr David Raye, said. BankWest is the group's Australian operation.

The bank's governor, Mr Bruce Pattullo, said it was seeing growth across its business and strongly defended the recent high level of cost growth, saying it was already paying back. "There's nothing wrong with spending money if you are getting a pay-back," Mr Pattullo said.