he major UK financial institutions became involved in the mis-selling scandal, whereby expected returns did not materialise and many home owners where left short, with a number having to take out further loans to cover the short fall. The worst seems to be over in this area, although this has cost many of the Banks dearly in terms of compensation payments anThe UK Based banking group HBOS has today announced that profits for 2006 are expected to beat the forecasts currently in the financial markets. The group has exposure both overseas and in the UK, however the UK still accounts for the bulk of business. As the UK clearing banks tend to get a feel for any change in consumer sentiment prior to a change in spending patterns, it is perhaps a little surprising that profits are growing faster than expected.

While the UK lending market has been firm for some time, HBOS are experience growth towards the upper end of their expectation. As costs are currently under control this has filtered through into the bottom line to boost the expected profit announcement. The group are still experiencing signs of strength in mortgage lending, as the UK appetite for house purchases continues unabated.

While this division is growing, it is interesting to see that HBOS have made particular reference to the divisions net margins, which are “broadly stable”, often financial talk for at the bottom of the expected range. This can mean either one of two things, HBOS have been offering too many promotions which have impacted into margins (e.g. reduced payments for an initial period) or they are starting to see a rise in the number of mortgage payment defaults.

HBOS also expect a reduction in endowment complaints after a period of two or three years when they were rising. Many of the major UK financial institutions became involved in the mis-selling scandal, whereby expected returns did not materialise and many home owners where left short, with a number having to take out further loans to cover the short fall. The worst seems to be over in this area, although this has cost many of the Banks dearly in terms of compensation payments and

ding patterns, it is perhaps a little surprising that profits are growing faster than expected.

While the UK lending market has been firm for some time, HBOS are experience growth towards the upper end of their expectation. As costs are currently under control this has filtered through into the bottom line to boost the expected profit announcement. The group are still experiencing signs of strength in mortgage lending, as the UK appetite for house purchases continues unabated.

While this division is growing, it is interesting to see that HBOS have made particular reference to the divisions net margins, which are “broadly stable”, often financial talk for at the bottom of the expected range. This can mean either one of two things, HBOS have been offering too many promotions which have impacted into margins (e.g. reduced payments for an initial period) or they are starting to see a rise in the number of mortgage payment defaults.

HBOS also expect a reduction in endowment complaints after a period of two or three years when they were rising. Many of the major UK financial institutions became involved in the mis-selling scandal, whereby expected returns did not materialise and many home owners where left short, with a number having to take out further loans to cover the short fall. The worst seems to be over in this area, although this has cost many of the Banks dearly in terms of compensation payments an

group are still experiencing signs of strength in mortgage lending, as the UK appetite for house purchases continues unabated.

While this division is growing, it is interesting to see that HBOS have made particular reference to the divisions net margins, which are “broadly stable”, often financial talk for at the bottom of the expected range. This can mean either one of two things, HBOS have been offering too many promotions which have impacted into margins (e.g. reduced payments for an initial period) or they are starting to see a rise in the number of mortgage payment defaults.

HBOS also expect a reduction in endowment complaints after a period of two or three years when they were rising. Many of the major UK financial institutions became involved in the mis-selling scandal, whereby expected returns did not materialise and many home owners where left short, with a number having to take out further loans to cover the short fall. The worst seems to be over in this area, although this has cost many of the Banks dearly in terms of compensation payments an

mean either one of two things, HBOS have been offering too many promotions which have impacted into margins (e.g. reduced payments for an initial period) or they are starting to see a rise in the number of mortgage payment defaults.

HBOS also expect a reduction in endowment complaints after a period of two or three years when they were rising. Many of the major UK financial institutions became involved in the mis-selling scandal, whereby expected returns did not materialise and many home owners where left short, with a number having to take out further loans to cover the short fall. The worst seems to be over in this area, although this has cost many of the Banks dearly in terms of compensation payments an

he major UK financial institutions became involved in the mis-selling scandal, whereby expected returns did not materialise and many home owners where left short, with a number having to take out further loans to cover the short fall. The worst seems to be over in this area, although this has cost many of the Banks dearly in terms of compensation payments and bad press (HBOS have put away an additional ?100 million to cover future compensation payments). It will be interesting to see the actual profits announced by Halifax, which should be released in early 2007.

While the UK banking sector is still showing signs of strength, with home loans in particular still very popular, it will be interesting to see how 2007 pans out. Many market experts are forecasting an initial slow down in the housing market, at which point the nerves of many home owners will be tested. As interest rates are set to move even higher in the early part of 2007, home owners will see an immediate increase in their mortgage payments. Welcome to 2007…