Over the past few years, HBOS has been one of the most aggressive banks on the UK high street, says Lex in the FT. But today it "is among the most cautious", having switched its focus from growing assets to protecting returns.
This shift should be no surprise, given the "deceleration of the UK economy", but what is a surprise is that HBOS is shifting gears "without, apparently, losing earnings momentum".
Indeed, says Robert Cole in The Times, and Britain's top mortgage bank pleased everyone with its pre-results statement this week. Profits are buoyant, there is to be a further £750m share buyback and the bank also "earned praise" for its plan to make good the £1.8bn deficit on its final salarypension schemes.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The group's good performance is down to several factors. HBOS has controlled costs well, but kept fee income from insurance and investment sales rising strongly too. It has also been more selective about who it lends to, says Lex, something that has helped keep revenues stable.
HBOS expects the UK economy to pick up speed again in the next 12 to 18 months, but in the meantime earnings per share admittedly helped by the ongoing buy backs should grow a solid 10% this year and next. This all makes HBOS "a good bank to own during potentially bad times".
-
8 of the best houses for sale with annexesThe best houses with annexes – from a period property in the Lake District to a 13th-century house with a two-bedroom annexe in Saltwood, Kent
-
Zelenskyy moves to appease Donald Trump – what happens now?Ukraine’s president Volodymyr Zelenskyy is conceding ground to secure the least-worst deal possible, says Emily Hohler
