HBOS pledges 100 new branches

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The Independent Online

Halifax Bank of Scotland moved to stem the tide of banking industry branch closures today by pledging to open 100 new sites over the next five years.

The plans, which will represent the biggest network expansion by the Halifax since the 1970s, were announced as the group said pre-tax profits rose 17% to £4.81 billion in 2005.

The new branches will be in the south of England and involve 50 towns where Halifax has little or no presence, and another 50 where the company will move to bigger sites. It expects to create about 1,500 jobs in the process.

Today's results were in line with market expectations after profits at an underlying level increased by 13% to £4.84 billion.

As a result, the UK's largest base of small shareholders - estimated to be 2.5 million private investors - will see their annual dividend payment from HBOS increase by 10% to 36.10p a share.

HBOS said profits from its high street operations rose 8% to £2.28 billion in the year, following a period when it adopted a "deliberate degree of caution".

In mortgages, the business decided against chasing growth in the final quarter of the year as its share of the new lending market fell to 21% against 23% in 2004, striking the "right balance between growth and returns".

In terms of bad debts, HBOS said its level of impaired loans increased by 28% over the period, representing 2.37% of advances.

The group said it planned to continue its cautious approach through "measured asset growth", but added that overall the economic background to trading in the UK remained encouraging.

With consumer spending and inflation pressures appearing subdued, HBOS said it expected the Bank of England to lower interest rates from the current 4.5%.

Chief executive James Crosby said: "Growth in the economy should quicken later in the year, ensuring that employment prospects will remain robust.

"We are confident that 2006 will be another strong year for value creation in HBOS."