The HBOS iron fist loses its grip

A pre-close trading statement from HBOS reveals that the lending giant’s retention scheme has not delivered the anticipated results.

As a result its mortgage market share has slipped.

The group says it expects to deliver a robust financial performance in 2007.

In retail, HBOS says it continues to enjoy “excellent” growth in savings and banking products whilst maintaining its relative caution in unsecured lending.

However, in mortgages, the retention strategy introduced in the latter part of 2006, designed to trade an element of gross share for improved principal repaid, has not delivered the anticipated benefits.

A statement on the London Stock Exchange says: “After a slower first quarter for net lending, we are now seeing an improved performance, having taken corrective action in the second quarter.

“The start to the year is however likely to result in a first half net lending share of less than 10%.

“We are confident that we will now return to our normal 15-20% range in the second half of the year.”

Keefe, Bruyette Woods says it expects some relative weakness following the trading statement.

It says the net mortgage of under 10% in the first half of 2007 is likely to “disappoint” with general insurance sales down.

It adds that this may be good for Northern Rock.