Britain's fourth-biggest bank HBOS is on track to deliver 7 per cent earnings growth this year after a robust start to the year and a recovery in its share of mortgage lending, it said today.
HBOS, the UK's biggest mortgage provider, said its current trading and financial performance "remains robust" and it was comfortable with analysts' forecasts that 2006 underlying pre-tax profit would rise to £5.2 billion ($9.6 billion), from £4.84 billion a year ago.
"It all looks reasonably encouraging," said James Hamilton, analyst at WestLB. "To say at this stage they are comfortable with (full-year) consensus earnings indicates to me that the first-half performance is at the very least in line with expectations."
HBOS said its share of net mortgage lending was running at a similar level to the first half of 2005, when it was 17 per cent.
It already signalled in April that its share of new mortgages early this year had recovered to within its 15-20 per cent target range.
The bank's share of new mortgages dropped to just 11 per cent in the second half of last year, compared with its 22 per cent overall share of the mortgage market, as it focused on profitable lending.
UK mortgage lending rose last month at the fastest pace for two years at a time when annual house price inflation is also strengthening, showing the UK housing market is strong.
HBOS said its credit quality and performance in each of its lending businesses was unchanged from previous guidance and its full year bad debt charge was on track to be in line with analysts' expectations. It said its appetite for unsecured lending remained deliberately restrained.
HBOS joins other banks in signalling that trading so far this year had been strong and it is less exposed than rivals such as Barclays and Lloyds TSB to unsecured lending, the area where concerns remain about how much bad debts will rise this year.
HBOS said its international business volumes had been "very encouraging" and sales of investment products had been strong across all channels. It said general insurance volumes continued to show strong growth in household insurance, but sales in motor and repayment insurance were slower.