Shares in HBOS plunged this morning after strong performance from the corporate division was dragged down by the underperforming retail division.
Shares dropped 9% to 639p after the company missed analyst consensus forecasts for 2007.
Underlying profit rose 3% to £5.7bn, with the corporate division, headed up by Peter Cummings, putting in a strong showing. Profits there rose 31% to £2.3bn.
Property accounts for 29% of the corporate division’s lending, down slightly on 2006, with property joint ventures accounting for a further 13%.
Caution
On the prospects for property, HBOS was cautious. ‘Our commercial property portfolio is expected to continue to perform relatively well, partially reflecting our preference for incremental growth in Europe,’ it said.
‘In an environment where commercial property prices are expected to remain under pressure our primary focus on cash flow based property transactions, with collateral valuations as support, will continue to drive our risk based decisions.’
It added that because of the weakening in the property market it had been selective in its new lending, and was focusing on companies with whom it has a long standing relationship.
