HBOS profits hit by writedown, mulls asset sales

LONDON, July 31 (Reuters) – HBOS Plc, Britain's biggest home lender, reported a 51 percent drop in first-half profits on Thursday as it took a 1.1 billion-pound ($2.2 billion) hit on debt securities impacted by the credit crunch.

But HBOS's shares jumped 7.9 percent to 293 pence, the top performing UK stock, as dealers said there were no nasty shocks in the results and profits beat expectations.

The bank also said it would consider selling assets if the the right price is offered, but would not comment on whether that means its Australian unit is for sale.

"We will look at all sensible options to over time improve deposit-to-loan ratios," Chief Executive Andy Hornby told Reuters.

"That's about running down some assets and if some buyers consider assets are worth more to them than they are to us then we don't rule that out."

HBOS said it made an underlying pretax profit, including the negative adjustments, of 1.45 billion pounds in the first six months of the year, down from 2.96 billion in the same period of 2007.

The average forecast given by four analysts polled by Reuters was for a profit of 1.29 billion pounds.

HBOS had already warned last month it would take a 1.03 billion pound hit on the debt securities held in its treasury trading book, sharply up from a 227 million pound knock last year from the value of risky assets tarnished by the financial markets turmoil.

HBOS, which raised 4 billion pounds from a rights issue earlier this month to rebuild its capital, said its core tier 1 capital ratio would have been 6.5 percent at the end of June if the fundraising was included, one of the strongest capital positions among Europe's banks.