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HBOS lending soars but profits are down

Profits at banking giant HBOS fell to £1.6bn last year from £1.7bn but net mortgage lending jumped by 183 per cent to £17bn from £6bn.

The company blames the fall in profits on the integration costs from the merger of Halifax and Bank of Scotland, the acquisition costs of buying a share in St James&#39 Place Capital and the operating assets and unit-linked funds of Equitable Life.

HBOS says it plans to raise £1.3bn by placing up to 130 million new ordinary shares to “fund organic growth”.

Its five mortgage brands took a 31 per cent share of the UK&#39s net mortgage lending from 15 per cent in 2000.

Halifax&#39s net lending was £7.4bn, the Bank of Scotland&#39s was £2.5bn, Birmingham Midshires&#39 £0.7bn, The Mortgage Business&#39s £1.2bn and Intelligent Finance&#39s £5bn.

HBOS&#39s net lending market share in the UK is 22 per cent and it has set a target of 25 per cent for the end of the year.

Sales of investment products through Halifax, Clerical Medical and St James&#39 Place increased by 55 per cent to £1.1bn from £712m in 2000.

Halifax intermediary sales grew by 68 per cent to £593m from £354m

Chief executive James Crosby says: “Our retail businesses set tough targets for 2001 and achieved every one of them. Our approach to pricing in the mortgage market was aimed at achieving better customer retention. This, together with our investment in Intelligent Finance, paid huge dividends in the mortgage market, where HBOS took 31 per cent market share of lending.”

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