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Summary Consolidated Balance Sheet

Financial assets held for trading

These are assets that are bought and sold by HBOS’s treasury operations and include securities that can be sold quickly to provide liquidity for the Group.

   As at 31 December 2007 2007
£m		 2006
£m
  Assets    
  Cash and balances at central banks 2,572 1,966
  Items in course of collection 945 880
  Financial assets held for trading 54,681 49,139
Loans and advances to customers

These are the loans that HBOS makes to personal customers and companies and where most of the Group’s credit risk arises.

   Disposal group assets held for sale   1,388
  Derivative assets 14,141 8,612
  Loans and advances to banks 8,056 11,593
  Loans and advances to customers 430,007 376,808
Investment securities

These are assets in which HBOS invests and comprise debt securities and equity shares. Some of these are held on behalf of policyholders who hold life assurance policies and pensions with the Group’s insurance and investment business.

 
   Investment securities 128,398 117,031
  Interests in jointly controlled entities and associates 985 601
  Goodwill and other intangible assets 2,790 2,689
  Property and equipment 1,494 1,573
  Investment properties
 4,731 5,010
  Operating lease assets 4,643 4,681
  Value of in-force long term assurance business 3,184 3,104
Customer accounts

This is the amount that customers have deposited with HBOS which is the UK’s largest provider of savings products.

   Other assets 10,320 6,738
  Total assets 666,947 591,813
  Liabilities    
  Deposits by banks 41,513 30,557
  Customer accounts 243,221 211,857
  Financial liabilities held for trading
22,705 22,334
Debt securities in issue

This includes bonds that provide the Group with medium term funding and commercial paper that provide short term funds. The funding may be secured against the Group’s assets.

   Disposal group liabilities held for sale   909
  Derivative liabilities 12,311 10,755
  Insurance contract liabilities 26,864 24,977
  Investment contract liabilities 52,828 49,486
  Other liabilities 14,498 16,425
  Debt securities in issue 206,520 183,650
Other borrowed funds

This comprises subordinated debt, preferred securities and shares. These provide longer term funding and can provide additional regulatory capital to support the Group.

   Other borrowed funds 24,253 19,692
  Total liabilities 644,713 570,642
  Shareholders’ equity    
  Issued share capital 1,131 1,139
  Share premium 2,997 2,856
  Other reserves 154 1,161
Shareholders’ equity (excluding minority interests)

This is the amount of capital that shareholders have invested in HBOS and which supports the operations of the business.

   Retained earnings 17,567 15,529
  Shareholders’ equity (excluding minority interests) 21,849 20,685
  Minority interests 385 486
  Total shareholders’ equity 22,234 21,171
  Total liabilities and shareholders’ equity 666,947 591,813

This Summary Financial Statement was approved by the Board on 26 February 2008.

Lord Stevenson Chairman, AJ Hobson Chairman of Audit Committee, AH Hornby Chief Executive, MH Ellis Group Finance Director

The SFS (including the section on Remuneration Policy) does not contain sufficient information to allow as full an understanding of the results and state of affairs of the Group as would be provided by the full Annual Report and Accounts (‘ARA’). Members can obtain, free of charge, a copy of the full ARA and can elect to receive this document in future years by contacting the Registrar as outlined on the back cover, or can view a copy at www.hbosplc.com.

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