General Meeting: Andy Hornby's speech
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Andy Hornby, Group CEO, updated shareholders about business performance at the General Meeting on 26 June. |
To raise capital by a rights issue is always a massive decision. We realise that it is a huge commitment for our shareholders. However, we are absolutely convinced that capital strength is going to be non-negotiable for banks going forward. Indeed, we are of the firm view that banks with stronger capital ratios will have competitive advantage over the years to come. As Dennis has said, this was not a decision which was taken lightly but we believe that it will prove to be a prudent and sensible approach that will leave HBOS well positioned to prosper in volatile markets over the course of the next three years.
Our trading is satisfactory and in line with the Group's expectations.
"HBOS expects a resilient performance in 2008, which will provide a sound platform for the future."
Andy Hornby, Group CEO
We are obviously not immune from the global dislocation in financial markets, but we are on track to demonstrate a resilient performance in 2008.
As we have indicated previously, this performance will be more weighted to the second half year, reflecting the Treasury negative fair value adjustments taken to the end of May. There has been no material change in the position of our Treasury business between our announcements at the end of April and the Trading Update.
In Retail, despite the decline in house prices, and the resulting impact on impairments, we are delivering a robust performance with better new lending pricing.
In Corporate we are also seeing improved pricing but we are adopting a cautious approach, and we are slowing asset growth.
In Insurance & Investment we are enjoying a good year. Insurance is benefiting from strong sales in home insurance and motor and, so far, the absence of the extreme weather events as experienced in 2007.
Despite unfavourable market conditions for equities, our investment business continues to see good profit growth for 2008.
Our International businesses continue to trade well, although we are deliberately growing assets at a slower pace than in recent years.
Declining house prices and a more challenging environment for Corporate will exert inevitable pressure on impairments. But HBOS expects to deliver a resilient performance.
Crucially, the Group is achieving substantially better pricing on new lending and we therefore expect good growth in net interest income in 2008.
The better new lending pricing and the re-pricing of existing assets, underpins our expectations of stable or potentially improving margins in 2009.
In summary, in a more difficult trading environment, HBOS expects a resilient performance in 2008, which will provide a sound platform for the future.
We are far from complacent and know that the next two years provide a far more uncertain macroeconomic environment than anything the banking sector has faced since the early 90s. However, we have taken decisive action on capital and we will continue to take a 
prudent and cautious approach to running our business. Put simply, the job of myself and our Board is to ensure that HBOS comes through these tough markets as a long term winner.
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Results of General Meeting - 26 June 2008 |
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