THE INTERVIEW: James Crosby - For the opening bat of consumer

It's noon on Thursday, and the Bank of England is about to announce its decision on interest rates. The day before, defying what everyone agrees is a pretty challenging consumer credit environment, HBOS has revealed a 15 per cent increase in half-year profits and a pounds 1bn share buy-back. Eager for information, the bank's ebullient chief executive, James Crosby, dives into the press office at HBOS's London headquarters. After a minute he emerges with a piece of paper. 'Great news! England are 86 for no wicket.'

The quarter-point cut in interest rates was also good news for HBOS. Crosby might be calling the economic conditions 'relatively benign', but there is no doubt that things have become tougher for lenders and borrowers alike. Crosby, however, is relaxed. 'It's a worse credit market this year than last, and worse last year than the year before. But by any historical measurement, it's not all that bad,' he says, adding for good measure: 'We increased the provisions on our mortgage book from pounds 9m to pounds 69m " but that's from nothing to 3/100 of 1 per cent of our loans.'

Everyone looks to HBOS as a bellwether of the health of the UK financial sector. It is by far the country's biggest housing lender; it is nip and tuck (with Aviva) the largest long-term savings provider; its share of current accounts is now past 10 per cent; in credit cards, it is at 13 per cent, and in small business banking, it is chipping away at the big boys with a 6 per cent share.

As Crosby puts it: 'We've got a good spread of business " in every market we have a starter for 10.'

For good measure, a PricewaterhouseCoopers survey found that HBOS paid more tax to the Treasury than any other UK plc, bar BP. Giants like BT paid a third of HBOS's bill.

The pressure of holding up the UK economy rests easily on the 49- year- old's shoulders. Crosby is a Yorkshireman, and proud of it. Tall and gregarious, he was a keen cricketer in his youth, opening the batting for Lancaster Royal Grammar School. ('My parents shipped me across the border,' he explains.) He arrived at the helm of Britain's largest mortgage bank by the rather unusual route of training as an actuary, then becoming a fund manager, before helping launch the upmarket wealth firm St James's Place Capital. When what was then the Halifax building society took a stake in St James's, he ended up running the group's life assurance business. Two years after Halifax demutualised and floated, he took over from Mike Blackburn as chief executive. 'I felt like I had won the lottery,' Crosby recalls.

Since his numbers came up, he has trod an aggressive, expansionist path, merging Halifax with Bank of Scotland, buying the rump of Equitable Life after its collapse, and attempting to buy Abbey National before thinking better of it. Having added pounds 250m to a planned pounds 750m buy-back this week, Crosby looks like he's going to take a breather from buying things. The only deal he would be tempted by in the UK would be to merge with one of the big four, and the competition authorities would not allow that.

As for the smaller banks, he doesn't see them as worth the trouble and cost of integration. And as for the long-standing rumours that HBOS could buy Egg from Prudential, he comments wryly: 'I wouldn't want to buy someone else's credit card book.'

Organic growth, though, might be off the menu for a little while as HBOS draws in its horns because of the difficult markets. Its lending criteria for consumer credit have been tightened, in line with those of the other big lenders. 'As bankers, when we lend money it's rather important for us to get it back,' he smiles.

In corporate lending, where HBOS's Bank of Scotland subsidiary was leading the growth of the leveraged buyout market, and came close to backing Philip Green's pounds 10bn aborted bid for Marks & Spencer, the bank has been getting assets off its books. 'It's not the deals we do, it's the deal we hold on to that matters,' Crosby says. 'Of a lot of the pounds 500m deals you have seen, we sold most of what we lent and have only pounds 25m left. In the market, leverage is going up and margins are going down " but not at HBOS.'

As for venturing overseas, he seems to have a 'nowt's so good as home' attitude. HBOS may have thriving businesses in Ireland and Australia " two markets where a few large players dominate, leaving room for an aggressive innovator " but other than that, his ambitions end at Dover. 'Investors take the view that if they want to buy into an American or German bank, they'll buy the shares directly,' he says, adding: 'There's lots of growth in taking 10-12 per cent market share business to 15-20 per cent. People may ask if there's a limit to growth in financial services, and I say, not necessarily. Ten years ago it looked like there was a limit to the growth of Tesco in food retailing.'

Talk of Tesco is pretty pertinent. HBOS has been an enthusiastic promoter of banking as a close relation to retailing. In a move that has since inspired HSBC and Royal Bank of Scotland to follow suit, it hired a retail expert to spice up its banking offer. But HBOS has gone further. Andy Hornby, the 38-year-old from Asda who was responsible for launching the ubiquitous bank manager Howard Brown as the face of Halifax, has now been put in charge of the whole of UK banking. This makes him favourite to succeed Crosby, now that finance director Mark Tucker has been headhunted to run Prudential after only a year at HBOS.