HBOS has reported this morning that it remains on track to deliver a resilient performance for 2008, after minimal write-downs of a further £58m via its debt securities.
In a trading update this morning, for the five months up until May 31, the bank reports that trading continues to be satisfactory and that its retail business is delivering a robust performance.
The bank says it expects the UK economy to slow further in 2008, with a modest rise in unemployment, while it expects house prices to drop by 9% in 2008.
The update states that declining house prices continue to exert pressure on its impairment charges.
While its Treasury portfolio comprises predominantly AAA-rated securities, the bank reports that since March 31, write-downs on debt securities held in its treasury trading book increased by £58m to £1.028bn.
But arrears levels in its mortgage book remain in line with expectations at the beginning of the year.
Its analysis of mortgage arrears up until the end of May, excluding repossessions, shows that 2.36% of its total specialist mortgages were in arrears, an increase from the December 2007 figure of 1.97%.
At the end of May, 1.22% of mainstream mortgages were in arrears, compared to 1.16% in December 2007.
HBOS forecasts a slower decline in margins than in 2007, before margins stabilise or improve next year.
