HBOS said yesterday it was on track to deliver seven per cent earnings growth this year after a firm start and recovery in its share of mortgage lending.

The company, which is Britain's fourth biggest bank and biggest mortgage provider, said current trading and financial performance remained "robust". It was comfortable with analysts' forecasts that 2006 underlying pre-tax profits would rise to £5.2bn from £4.84bn a year ago.

WestLB analyst James Hamilton was a bit more cautious. "To say at this stage they are comfortable with full year consensus earnings indicates to me that the first half performance is at the very least in line with expectations."

However, some analysts said HBOS's trading update was short on positive surprises and there was a measure of disappointment that it did not increase its 2006 share buyback programme – a strategy to return value to shareholders – from the £750m already promised.

Other analysts noted that the company had already repurchased £447m of stock and speculated that an increase in the buyback programme to £1bn was on the cards. They said a similar amount could be repurchased next year.

Broker Dresdner Kleinwort Wasserstein said yesterday's statement refuted the charge that HBOS, after a period of taking market share from other banks, had gone ex-growth. "Management has a clear, focused strategy which offers several further years of organic growth in the UK, Ireland and Australia," it said.

The company is heavily biased towards the UK but sees Ireland and Australia as territories in which it can replicate its challenge to incumbent banks whom it perceives as complacent.

New mortgage lending had dropped to 11 per cent in the second half of last year – compared with the company's 22 per cent share of the overall mortgage market – as the focus came on to profitable lending.

HBOS said its credit quality and performance in each of its lending businesses was unchanged from previous guidance and its full-year bad debt charge was on track to be in line with expectations. Analysts estimate the charge will rise to some £1.9bn from £1.6bn.

The company joined other banks that have issued recent statements in signalling that trading so far this year has been strong. It is less exposed than rivals like Barclays and Lloyds TSB to unsecured lending.

HBOS said sales of investment products had been strong. General insurance volumes continued to show strong growth in household insurance but motor and repayment insurance were slower.

This is cache, read story here