British bank HBOS posted first-half profits in line with market expectations as the bank boosted customer deposits and sales of investment products, the company said today.
Pre tax profit for the six months ended June 30th rose 21 per cent to £2.16 billion, Britain's biggest mortgage lender said in a statement.
Analysts expected profit of about £2.13 billion, according to a Reuters poll of 10 analysts. The range was £2.07 billion to £2.2 billion.
"These results point clearly to a strong outcome for the full year," the bank said in a statement.
HBOS's net interest margin, a measure of profitability, dropped to 1.68 per cent from 1.77 per cent for full-year 2003 as the cost of borrowing money to lend increased ahead of interest rate rises, the bank added.
HBOS, formed from the merger of Halifax and Bank of Scotland in 2001, has piled on assets in mortgages, unsecured loans and current accounts amid a consumer boom.
But with fewer low-interest deposits than main rivals, margins have shrunk as the cost of raising money in the market to fund its loans has risen. Rivals Northern Rock and Alliance & Leicester, which have also reported results in the past two weeks, have also highlighted margin compression.
HBOS shares closed little changed yesterday at 675 pence. The stock has underperformed the FTSE UK banks index by about 2.4 per cent in the past three months. 2.5