Moneyadviceforu

Targets almost always end up as millstones. Andy Hornby of HBOS is the latest chief executive to discover this. The world tends to move on and, in the world of credit, it has moved extremely quickly.

HBOS shifts focus from home loans,Hornby has abandoned a target for net lending because in today’s mortgage market it’s no longer relevant. The bank already has a 20pc total share and is right to chase quality, not quantity, in a contracting market. It has the chance to boost lending margins as loans become more expensive thanks to the fallout from the credit crisis.
The UK mortgage market is now about the money you make, not the market share you take. But that also implies a slowing in the home loan market so Hornby needs to make a tactical switch and move capital to more productive areas such as its corporate lending arm run by Peter Cummings. Here, conditions are getting better for large lenders. Rates are rising and the terms they can impose improving. But the HBOS move also implies cooling house prices and thus a slowing economy which will be the longer term legacy of the credit crunch.