HBOS has seen its net share of lending in the mortgage market increase to 22 per cent for 2007, following a dismal start to the first half of the year.
The lender had previously reported a disappointing 8 per cent share of the market for the first half of 2007 after a failed retention strategy.
Its market share was 21.2 per cent in 2006.
The Group has since announced it will no longer set half yearly or annual net lending targets and will favour profitable growth over market share.
HBOS announced in its full year results today that profit before tax was down 4 per cent to £5,474m in 2007, from £5,706m in 2006.
The Group’s net interest margin fell by 9 bps to 1.63 per cent. It says that the main driver of this reduction was in the retail section where margins fell 12 bps reflecting the competitive pressure on mortgages in the first half and the increased costs of wholesale funding in the second half.
In retail, HBOS says that secured impairment losses were only £28m, down from £108m in 2006. Retail unsecured impairment losses in the second half were lower than in the first half at £576m, compare to £690m in the first half of 2007.
HBOS says that the current turmoil in global financial markets continues to cause “considerable uncertainty” into the plans of all financial institutions.
It says: “We are planning on the assumptions that market conditions will remain uncertain throughout 2008.”
HBOS says that in retail it will continue to favour profitable growth over market share.
It says: “Over the last five months we have seen mortgage prices adjust in the light of increased funding costs. Our strong multi-brand savings franchise has been to the fore in 2007 and we expect to see strong deposit growth in 2008, despite an expected increase in competition for retail funds.
HBOS says that during the dislocation in financial markets in the latter part of 2007, customer deposit growth and the supply of wholesale funding to HBOS remained strong.
It says that in recent years, prior to the dislocation, it had lengthened the maturity profile of our wholesale funding, whilst at the same time diversifying the types and sources of funding.
HBOS says: “This has been at some cost to margins during this period but has given us the necessary flexibility to operate in these challenging markets. We will continue to ensure that we maintain an appropriate liquidity profile consistent with our planned business growth.”
Chief executive Andy Hornby says: ‘In 2007, the disciplined execution of our strategy has resulted in good earnings growth for our shareholders despite difficult market conditions. With our multi-brand distribution strength, strong balance sheet and low cost operating platforms, we are well placed to take opportunities presented by these difficult markets and deliver good growth in shareholder value over the next few years.’