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Last Updated: Thursday, 13 December 2007, 08:34 GMT
HBOS in 180m credit crunch hit
HBOS signs

HBOS, the UK's fourth-largest bank, has said it will make a 180m ($367.7m) write-down of assets as a result of the credit crunch.

However, the bank said that it was on track to meet analysts' forecasts for its annual earnings.

HBOS added it expected a "good full year outcome" despite difficulties in global markets and liquidity problems.

But HBOS said it expected conditions would remain tough and that it would remain "prudent" in its lending policy.

HBOS said underlying earnings per share should be 106p, up from 100.5p in 2006, meeting analysts' expectations.

The bank said its share of the UK mortgage market would be in the region of 17-18% in the second half of 2007, recovering from a share of only 8% in the first half.

HBOS said that the 180m write-down related to asset-backed securities and not exposure to US sub-prime borrowers, where it saw no credit impairments.

The bank said its total exposure to US sub-prime investments remained less than 0.1% of its balance sheet.

It added that this exposure fell to 430m by the end of November from 550m at the end of August.

Industry trend

This latest statement is in contrast to other banks that have been hard hit by their exposure to the US sub-prime mortgage market.

The sub-prime market specialises in providing loans for those with risky or non-existent credit records.

Once US interest rates increased, many borrowers who had bought during the boom found they could not afford the mortgage repayments.

Earlier this week, Swiss investment bank UBS announced a $10bn write-off in debts related to the sub-prime sector.

Last month, Barclays announced a 800m loss for October, putting losses at Barclays Capital investment bank at 1.3bn.

Meanwhile, Lloyds TSB expects the credit crisis to lead to losses of 200m for the current financial year.

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