HBOS said this morning it is on course to beat market expectations for earnings growth this year due to strong revenue growth and tight cost control.
Britain's fourth-biggest bank said it should exceed market expectations for underlying earnings per share of 96.8 pence for this year, up 12 per cent from 86.4p in 2005 and for underlying 2006 pre-tax profit.
HBOS said it would extend its share buyback programme into 2007, and initially plans to repurchase £500 million of shares.
It said it planned "a measured increase" in its targeted asset growth for next year in all its markets, apart from UK unsecured lending, where it remains cautious.
Losses for bad debts are likely to be lower than the £1.9 billion predicted by analysts for the full year, with credit quality trends continuing as before, the bank said. Bad debts totalled £1.6 billion in 2005.
Lending growth is likely to be at the upper end of the anticipated range and is being delivered with "modest margin impact", it said.
Mortgage net lending "is expected to be comfortably within" its stated full-year market share range of 15-20 per cent, indicating a slight slowdown in the second half after the bank attracted 21 per cent of net mortgage lending in the first half.
It said cost growth was expected to be in line with guidance for the full-year at about 6 per cent, with core UK cost growth below 3.5 per cent.