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Last Updated: Wednesday, 1 March 2006, 13:09 GMT
HBOS set to open 100 new branches
Bank of Scotland and Halifax logos
The new branches will be opened over the next five years
The UK's fourth-largest bank, HBOS, is to open 100 new Halifax branches in the south of England creating 1,500 jobs as it looks to increase its market share.

HBOS, which was formed by a merger of the Halifax and Bank of Scotland, also said that 2005 pre-tax profits rose 17% to 4.8bn ($8.4bn) from a year earlier.

The UK's biggest mortgage lender was upbeat about the economy and forecast increased housing market activity.

While house price gains will be modest, interest rates should fall, it said.

Fall further

HBOS said it would open the 100 new Halifax branches over the next five years.

The expansion programme is the company's biggest since the 1970s.

We continue to expect interest rates to fall further
James Crosby, HBOS chief executive

HBOS plans to open 12 of the branches this year. About half of the 100 branches will be in towns where Halifax has had little or no representation.

The High Street lender currently has about 1,000 Halifax branches across the UK, with 300 Bank of Scotland outlets. That gives HBOS almost 10% of the country's bank and building society branches.

HBOS's chief executive James Crosby explained that the economic conditions in the UK remained positive.

"The economic background to trading in the UK remains encouraging," he said.

"Consumer spending and inflation pressures remain subdued. So despite recent indications to the contrary, we continue to expect interest rates to fall further."

'Results are fine'

On a less positive note, the bank said bad debts on its loans rose to 1.6bn in 2005 from 1.26bn a year earlier.

HBOS shares dropped by almost 5% to 10.10 in London on Wednesday, after posting a rally to record levels.

"The results are fine," said James Leal, analyst at brokerage Teather & Greenwood.

But "given the strong performance of the shares up until today, they were always going to be a bit vulnerable to short-term profit taking," said Mr Leal.

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