The write-downs come amidst warnings that there is likely to be worse results to come.
The lender has reported write-downs for secured lending at £700m for the eleven months to November 30 2008, up £300m from September 30. Write-downs for unsecured lending soared by £200m in the last quarter to £1bn.
HBOS’ corporate investments have also taken a massive hit with £3.3bn in write-downs. This is compared to the £1.7bn in write-downs recorded for September and £500m in June.
A HBOS statement reads: “Global market and economic conditions, UK recession and increasing unemployment will continue to present a particularly challenging operating and credit environment.
“Lower interest rates should ease the debt burden but exert further pressure on net interest income. These factors will impact on HBOS capital ratios. But through the injection of capital and liquidity facilitated by the government, both currently and going forward, HBOS remains confident in its ability to navigate through this difficult period, as it becomes part of the enlarged Lloyds Banking Group.”
Shares in both HBOS and Lloyds have plummeted on the news. HBOS’ share price plunged from 90p to its current 69p and Lloyds shares are trading at 130p against yesterday’s 158p.