Summary Consolidated Income Statement
Net interest incomeInterest income is earned by HBOS on the loans and advances that it makes to customers and from investments. Interest expense is the interest paid by HBOS to customers with savings and deposit accounts and to investors who fund HBOS by investing in debt securities in issue and other borrowed funds. |
For the year ended 31 December 2007 | 2007 £m |
2006 £m |
|
| Interest income | 35,012 | 26,742 | ||
| Interest expense | (27,708) | (19,342) | ||
| Net interest income | 7,304 | 7,400 | ||
| Net fees and commission income | 1,260 | 1,163 | ||
| Net earned premiums on insurance contracts | 5,616 | 5,648 | ||
| Net investment income related to insurance and investment business |
4,613 | 6,445 | ||
| Other operating income | 2,498 | 2,058 | ||
| Net operating income (continuing operations) | 21,291 | 22,714 | ||
Impairment losses on loans and advancesThese are losses incurred by HBOS in respect of the credit risk arising on loans and advances to customers when customers fail to repay their loans. |
Change in investment contract liabilities | (2,538) | (2,910) | |
| Net claims incurred on insurance contracts | (2,952) | (2,328) | ||
| Net change in insurance contract liabilities | (2,244) | (3,894) | ||
| Change in unallocated surplus | 50 | (569) | ||
| Administrative and other expenses | (6,386) | (5,870) | ||
| Operating expenses | (14,070) | (15,571) | ||
| Impairment losses on loans and advances | (2,012) | (1,742) | ||
Impairment losses on investment securitiesThese are losses incurred by HBOS when the companies in which it invests are unable to pay their debts or when the companies’ shares lose their value. |
Impairment losses on investment securities | (60) | (71) | |
| Operating profit (continuing operations) | 5,149 | 5,330 | ||
| Share of profits of jointly controlled entities and associates | 234 | 126 | ||
| Non-operating income | 91 | 250 | ||
| Profit before taxation | 5,474 | 5,706 | ||
| Tax on profit | (1,365) | (1,772) | ||
| Profit after taxation | 4,109 | 3,934 | ||
| Profit of disposal group | 4 | 5 | ||
| Profit for the year | 4,113 | 3,939 | ||
| Attributable to: | ||||
| Parent company shareholders | 4,045 | 3,879 | ||
| Minority interests | 68 | 60 | ||
Basis of preparationThe Summary Financial Statement (SFS) has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and effective at the date the SFS is approved by the Board. Information about our critical accounting judgements and estimates can be found on pages 168 and 169 of the Annual Report and Accounts. |
4,113 | 3,939 | ||
| Ordinary interim dividend paid (pence per share) | 16.6 | 13.5 | ||
| Ordinary final dividend proposed (pence per share) | 32.3 | 27.9 | ||
| Basic earnings per ordinary share – continuing operations (pence) | 106.2 | 100.5 | ||
| Basic earnings per ordinary share – disposal group (pence) | 0.1 | |||
| Basic earnings per ordinary share – total (pence) | 106.2 | 100.6 | ||
| Diluted earnings per ordinary share – continuing operations (pence) | 105.5 | 99.4 | ||
| Diluted earnings per ordinary share – disposal group (pence) | 0.1 | |||
| Diluted earnings per ordinary share – total (pence) | 105.5 | 99.5 | ||
| Directors’ remuneration | £’000s | £’000s | ||
| Emoluments | 11,834 | 9,577 | ||
| Total potential pre-tax gains on share options exercised | 715 | 402 | ||
| Total value of shares vested under long term incentive plans | 4,989 | 6,681 | ||
Retirement benefits accrued to one Director for part of the year until benefits reached the ‘Lifetime Allowance’. In 2006 retirement benefits accrued for one Director for the full year and in respect of five Directors until 5 April 2006 at which point their benefits were above the ‘Lifetime Allowance’ at ‘A-day’. Thereafter further service based accrual ceases with all Directors receiving an annual non-pensionable cash allowance of 25% of salary, payable monthly, in lieu. These payments are included in emoluments. A detailed analysis of Directors’ emoluments, pension entitlements, share interests, share options and shares received under incentive schemes is given in the ‘Report of the Board in relation to remuneration policy and practice’ in the Annual Report and Accounts 2007.