HBOS enjoys huge profits from 2006

HBOS, one of the UK's major banks, which was the result of a merger between Halifax and the Bank of Scotland, has announced that it enjoyed a nineteen percent rise in annual pre-tax profit in 2006 compared to 2005. The bank enjoyed pre-tax profits of £5.71 billion in 2006 compared to £4.81 billion a year earlier.

Despite major banks reporting record levels of bad debt and being hit with cuts in penalty charges as well as claims from customers regarding unfair charges, a number of the UK's major banks have already reported hefty profits.

However, despite these huge profits officials from the HBOS have also stated that this year they will lose around sixty million pounds in income as a result of ceiling limits that regularity bodies have places on credit card charges for late repayments.

Banks and credit card companies can now charge no more than twelve pounds, whereas previously some were charging over twice this amount. The ceiling limit was enforced last year by the Office of Fair Trading after an investigation revealed that the amount charged to the consumer in no way reflected the costs incurred by the bank for late repayments.

HBOS officials also revealed that there was a significant drop in the number of people taking out repayment insurance last year, with figures indicating that sales of this type of cover – designed to protect those taking out loans and credit against missing repayments through sickness or redundancy – fell by ten percent last year.

Many think that this is as a result of the government’s investigation into this type of cover – also known as PPI – which has been at the centre of controversy over recent months. However, the HBOS stated that the drop in sales was more likely because of increased stringency over lending, which means that fewer people were accepted for loans and credit cards.

Tom Smith
02.03.07