Bank form following the merger of Halifax and Bank of Scotland on 10th September 2001, HBOS has 22 million customers. With assets of over 440 billion, it is the UKs largest mortgage and savings provider as well as being a major player in the provision of new current accounts and credit cards in the UK. With around 3 million private shareholders, HBOS has the largest private shareholder register in the UK.

            Red = 25 day moving average.           Green = 200 day moving average.

AFX - 20 October 2006

LONDON (AFX) - The UK's Office of Fair Trading said it plans to refer the market for payment protection insurance (PPI) to the anti-trust watchdog, arguing that a lack of competition between PPI providers results in poor value for consumers.

The move marks a setback for the UK banking industry, which generates large profits by selling payment protection policies, designed to keep up debt repayments if borrowers lose their income.

Unveiling the conclusions of a six-month study of the PPI industry, the OFT said there is 'little competitive pressure' in the market because consumers usually buy PPI from the same bank that is lending to them.

'Following the work we have undertaken it is clear that many consumers are failed by PPI - insurance which gives them a poor deal and often less protection than they think,' OFT chief executive John Fingleton said in a statement.

'There is limited evidence the industry is taking steps to improve the situation, but we believe they will not make major improvements to competition in the market,' he said.

The OFT is publishing its report today, and will hold consultations with banks and consumer organisations before reaching a final decision on whether to refer the PPI market to the Competition Commission early next year.

The Commission could ultimately impose price caps on PPI, making it less profitable for the banks.

According to the OFT, PPI generates revenues of about 5.5 bln stg for the leading UK banks every year.

Analysts say the banks that generate the most profit from PPI, and that have the most to lose from a clampdown on the sector, are Lloyds TSB Group PLC, HBOS PLC, Northern Rock PLC, and Barclays PLC.

The OFT launched its investigation in April in response to complaints from consumer groups that PPI is too expensive and is frequently mis-sold as a result of high pressure sales tactics.

The Questor column

01/03/2007


HBOS - Questor says Buy

Is there anything HBOS will not claim to be top in? It has the "biggest small shareholder base in the UK", enjoys a cost efficiency at which "very few banks operate", is "the UK's largest provider of savings products", and will hand 550m to staff this year in what "is believed to be one of the largest payouts of its kind". Most importantly, "HBOS is the UK's best performing major bank stock over the past five years". Superlative stuff, then.

Questor graphic

It would be nice to prick that self-satisfied bubble, but HBOS has reason to be smug. HBOS has been gaining market share in almost every business it operates, now claiming 11pc of the current account market, to add to 21pc of mortgages and a 16pc share of household savings. Chief executive Andy Hornby may like to distance HBOS from the "Big Four" banks whose business he's after, but the Halifax owner is now bigger by market capitalisation than Lloyds TSB.

Success is difficult to repeat, though, and sustained growth is analysts' biggest concern. HBOS managed a 19pc increase in profits to 5.7bn after a 17pc last year. With the bank itself admitting that competition, particularly in the mortgage market, is turning the screw and that unsecured personal lending is no longer such an attractive business, profit margins are likely to come under pressure.

Mr Hornby is confident, though, that HBOS is perfectly positioned to take advantage of the "return of the savings habit". Again, however, investments tend to deliver slower growth. More promising is business banking, where profits were up 17pc to 1.66bn and the margin is improving. But slow, "selective" growth is predicted once more.

The bad news was on bad debts, which may rise again this year. But the 4.6pc share price fall appeared an overreaction. Some 93pc of its loan portfolio is secured and HBOS has already proved its sure-footedness, first by being one of the earliest to draw attention to deteriorating credit quality in the UK and last year by selling off its US sub prime auto-leasing division before the sub prime market cracked.

At 9.8 times 2007 earnings with a 4.3pc yield, yesterday's share price slide should be a buying opportunity.

And I thought end of year results were pretty good. What exactly does the market want. If you look at the SP fall you would have thought that this stock had gone ex divi already. What a joke.

Maybe the way it treats some of it's customers is getting through, I have held these in a PEP since the free share issue with re-invested dividends topping up my holding. I recently went to my Halifax branch and a really helpful lady faxed my instructions to action the sale, she gave me a copy of the fax saying I would receive a cheque in 5 days. Ten days later - nothing, it transpires that the fax was not received, the sp is down nearly 1 and I have to wait for a call next week.
Despite my experience I think HBOS are a steal atm, if only I had the proceeds from the sale I would buy them again.
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Yorkshire Post

HBOS commits to free banking - By Eric Barkas City Editor

FREE banking is the buzz right now and HBOS chief Andy Hornby has no problem pushing the right button. The big banks are facing a clampdown on penalty fees from the regulator as more customers claim back charges levied against them.


Mr Hornby says: "We are committed to free banking. It has served us and the customer very well. Its simplicity encourages the switching of accounts."

What he means is that HBOS is currently gathering an estimated 19 per cent share of new bank accounts. The smoother the switch, unencumbered by charges to pay, the better for the bank.

"It's in our interests... we like free banking... I really hope free banking is here to stay."

That's not necessarily the same thing as freedom from any charge levied on standard accounts going overdrawn, for example. But if penalty fees are constrained, banks might seek to recoup lost income by charging en-bloc for such accounts.

Mr Hornby insists: "We absolutely want free banking to stay and that is our commitment."

HBOS has for a long time positioned itself as a champion of the consumer and tried to differentiate itself from its rivals HSBC, Royal Bank of Scotland, Barclays and Lloyds TSB.
Yesterday it reported taxable profits for 2006 that were a record, up 19 per cent at 5.7bn. After one-off factors, underlying profits were 14 per cent ahead at 5.5bn.

After a bad Press recently for the big banks, Mr Hornby said: "Profit isn't a dirty word. Profit is the force that drives the market economy.

"Importantly, profits are being driven by good deals for our customers."

The HBOS story is well documented: Grab market share from rival banks (they used to be called the Big Four but HSBOS is now one of them, which shows the progress it has made); continue with targeted expansion in Ireland and Australia, where incumbent banks are vulnerable to the HBOS model; keep costs down so increased income really works; cherish capital if you can't use it, give it back to shareholders (the bank spent 92m on share buybacks in 2006 and plans 500m this year).

Credit quality is said to be good because for every 44 per cent of debt the bank takes on, it keeps 56 per cent of the equity. It stays out of the unsecured loan market around 93 per cent of loans are secured. "Collateral is king," Mr Hornby says.

Yesterday's figures were ahead of expectations but, in a market still falling after Far Eastern stock market shocks, the shares dipped almost five per cent to 1081p. They were at a record high of 1176p last week.

Analysts worried about margins. Net interest margin the difference between what is charged to borrowers and paid to savers and a key driver of profits slid to 1.78 per cent from 1.8 per cent. In the dominant retail business, this was affected by increased mortgage lending a lower margin business and increased competition in buy-to-let mortgages. The company expects modest margin decline in 2007.

However, the ratio of costs to income improved to 40.9 per cent from 42.2 per cent. And, as well as grabbing new bank accounts, the bank took 11 per cent of new credit card accounts.

Gross mortgage lending was stable at 21 per cent. The share of new lending was up to 17 per cent from 14 per cent. The savings business took 16 per cent of the household sector's liquid assets.

HBOS's target is to get between 15 to 20 per cent share in its main markets. Mr Hornby says UK liquid savings will exceed 1 trillion for the first time by the end of the year. Total household financial assets are forecast to grow to 4 trillion.

"For the second year running, we are number one for new investment products in the UK," he added.



Bank turns in benefits for all

Of all the banks, HBOS is the most savvy when it comes to promoting what it does for customers, employees and shareholders. Customers get attractive rates on current account balances. Some 65,000 employees get to share a bonus and free shares pot worth 550m. HBOS's 2.1m army of small shareholders the biggest in the UK gets a 15 per cent increase in the total dividend, worth 41.4p per share. That makes the average payout 158.

The bank has 232,000 small shareholders in Yorkshire, who will share 38m in dividends. It is the region's biggest corporate employer, with 14,000 people, 21 per cent of its UK workforce. They will share more than 90m.

Mail on Sunday

Halifax Bank of Scotland has won the respect of the City for its ability to deliver steady growth. But a cautious outlook last week from the banking group regarding bad debts and increasing competition within the mortgage market did manage to send a flurry of concern through the market.

HBOS shares slipped 98p in the week to 1055p, even as the group posted a 19% rise in pre-tax profits to 5.7bn. The bank also revealed it had increased its market share in the mortgage sector and had succeeded it securing new customers at its savings division.

At the same time, the firm's investments are performing well with underlying profits up 19%. The stock looks to be a buy as the group aims for solid revenue growth while it continues to monitor costs. There is also potential for a generous prospective dividend yield.

HBOS PLC
06 March 2007


HBOS plc


HBOS plc announces that on 5 March 2007 it purchased 750,000 of its ordinary
shares at a price of 1044.998 pence per share. It is intended that these shares
will be held in Treasury.


Following the purchase, HBOS plc holds 5,782,000 of its ordinary shares in
Treasury and has a total of 3,762,737,330 ordinary shares (excluding shares held
in Treasury) in issue.

I see Shares magazine is recommending a sell on these today, I was extremely fortunate selling my holding earlier this year @ 11.60 and was thinking about buying again.
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WELLDONE GEORGE. BUT WHY 2517.

BAYLIS----- It was a number quite close to my heart for 25 years. Also it distinguishes from other George's.
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Not seen these levels since Oct 2005.
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