HBOS profits hit by writedown

HBOS, Britain's biggest home lender, reported a 51 per cent drop in first-half profits yesterday as it took a £1.1-billion hit on debt securities impacted by the credit crunch.

But HBOS's shares jumped 7.9 per cent to 293 pence, the top performing UK stock, as dealers said there were no nasty shocks in the results and profits beat expectations.

The bank also said it would consider selling assets if the right price is offered, but would not comment on whether that means its Australian unit is for sale.

"We will look at all sensible options to over time improve deposit-to-loan ratios," stated chief executive officer Andy Hornby.

"That's about running down some assets and if some buyers consider assets are worth more to them than they are to us then we don't rule that out."

HBOS said it made an underlying pretax profit, including the negative adjustments, of £1.45 billion in the first six months of the year, down from 2.96 billion in the same period of last year.

The average forecast given by four analysts polled by Reuters was for a profit of £1.29 billion.

HBOS had already warned last month it would take a £1.03 billion hit on the debt securities held in its treasury trading book, sharply up from a £227 million knock last year from the value of risky assets tarnished by the financial markets turmoil.

HBOS, which raised £4 billion from a rights issue earlier this month to rebuild its capital, said its core tier 1 capital ratio would have been 6.5 per cent at the end of June if the fundraising was included, one of the strongest capital positions among Europe's banks.

HBOS plc is a UK-based company. It is the holding company of the HBOS Group. It operates through five divisions: retail, corporate, insurance & investment, international and treasury & asset management. The company's retail range of products includes personal and business banking products and services to 23 million customers.