HBOS recovers from mortgage blunder
by Gill Montia
Story link: HBOS recovers from mortgage blunder
HBOS, which own Halifax, has apologised to shareholders for introducing a new mortgage pricing policy that adversely affected it main mortgage market in the first-half of 2007.
The bank was attempting to increase its mortgage margins but in fact succeeded in reducing its share of the mortgage market from 17% to just 8%, in a matter of months.
As a result, retail profits were down for the first time in many years but the situation has now been remedied and HBOS has regained its normal market share of lending.
Also published were first-half figures covering repayments made to customers who have challenged fees for unauthorised overdrafts.
Repayments amounted £79 million in total, a figure midway between the £116m paid out by HSBC and the £36m paid by Lloyds TSB for the same period.
HBOS expects its fee income to be £65m lower over the entire year, partly because the bank has had to reduce credit card charges in response to a directive from the Office of Fair Trading and also because of lower mortgage withdrawal fees.
However, first-half profits of £2.96 billion were well above City expectations and represented a 13% increase on the first-half of 2006.
Finally, the group’s insurance division expects to pay out £60 million in claims for the June floods and around £70 million for the floods occurring in July.
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