Chief Executive’s Report
Key Performance Indicator
Cost:income ratio
* 2006 has been restated, as announced on 12 June 2007, to reflect the divisional reorganisation and the change in definition of underlying.
Cost leadership
The HBOS cost leadership ambition relative to the major peers is derived from an understanding that it is a source of sustainable competitive advantage. Cost leadership can provide pricing power and the ability to offer customers a lower price for the same returns. It can also offer the opportunity to capture market share from others without any erosion of credit quality, thereby growing sustainable revenues. Cost leadership at HBOS does not mean reduced investment in our businesses but it does mean a cultural focus on taking out the least productive costs and reinvesting these savings in growing value for shareholders.