Brokerages cuts HBOS rating and price target

(Reuters) - Five brokerages cut either their recommendation or their price target on Britain's biggest mortgage lender HBOS HBOS.L mainly on the slowing UK economic outlook, concerns about its asset-backed securities portfolio and loan growth.

On Wednesday, the company said higher funding costs hit its margins last year and both financial and housing markets were set to stay tough, eclipsing a slim rise in profits and hammering its stock.

The bank also said that it would take a 227 million pound ($446 million) hit from the value of risky assets tarnished by the financial market turmoil.

Goldman Sachs said in its research note that although the company's 2007 results were inline with expectations, concerns on the scale of its ABS portfolio, funding and impairments severely clouded its outlook.

"With wholesale funding cost remaining high for an uncertain period, volume growth weaker, and a difficult environment for corporate realisations, we expect a sharp slowdown in revenue growth," Citigroup said in a research note.

The ratings and price targets by the brokerages are as follows:

Brokerage Rating Price Target

Current Prior Current Prior

Lehman Brothers Underweight - 643 pence 705 pence