Britain's biggest mortgage lender, Halifax Bank of Scotland (HBOS) has said it would meet analyst profit forecasts for this year.
The bank, which has a business banking operation in Ireland and sells mortgages directly into the Republic from Scotland, said that its net interest margin had narrowed more in the second half than the first.
HBOS has boosted lending aggressively since it was formed from the merger of Halifax and Bank of Scotland two years ago. But with British bank profit margins squeezed by low interest rates this year, some analysts are concerned that HBOS is growing at the expense of profitability.
HBOS chief executive Mr James Crosby told analysts on a conference call that most of the margin squeeze was because funding costs rose before the Bank of England raised rates last month and before HBOS could change its rates to compensate.
HBOS is expected to post a year pre-tax profit of £3.69 billion (€5.2 billion), according to analysts, up 27 percent on 2002.
HBOS said its net interest margin would fall by about 0.05 percentage points this year from 1.83 per cent at the end of 2002 and 1.82 per cent at the end of the first half.
