Credit quality concerns overshadow banks' bumper profits.

Investors Chronicle, August, 2006

With most of the UK's banks having now reported half-year figures, credit quality remains a key issue facing the sector. So far, virtually all lenders have reported some level of credit-quality deterioration, with even the mortgage lenders - usually well insulated given the high proportion of secured lending on their books - reporting rising bad-debt charges.

Northern Rock - the sector's most efficient lender - said that its impairment charge had jumped by 75 per cent year on year, while rival Alliance & Leicester reported a 56 per cent impairment charge hike. HBOS, too, failed to escape this trend - its impairment charge rose 15 per cent, year on year, while HSBC's group- impairment charge jumped 19 per cent, reflecting the impact of its US sub-prime lender,...

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