HBOS profit hit by writedown

By Steve Slater

LONDON (Reuters) - HBOS HBOS.L, Britain's biggest home lender, said it is considering asset sales after reporting first-half profits halved due to a 1.1 billion pound hit on debt securities hurt by the credit crunch.

HBOS's shares jumped 6.5 percent to 288.5 pence by 11:25 a.m. on Thursday, making it the top-performing UK stock.

Analysts detected no nasty shocks in the results, and said profits beat expectations, costs appeared under control and the shares had already been hit hard.

The bank said it would consider selling assets if the right price was offered, but would not comment on whether that meant its Australian operation Bankwest was for sale.

"We will look at all sensible options over time to improve deposit-to-loan ratios," Chief Executive Andy Hornby told Reuters. "That's about running down some assets and if some buyers consider assets are worth more to them than they are to us then we don't rule that out."

He later told analysts he would consider potential sales over the next year to 18 months.

Jason Napier, analyst at Deutsche Bank, said in a note: "The fact that asset sales are being contemplated could be a significant positive if the right assets (Australia) are sold."

HBOS said it made an underlying pretax profit, including the negative adjustments, of 1.45 billion pounds in the first six months of the year, down from 2.96 billion in the same period of 2007. The average forecast given by four analysts polled by Reuters was for a profit of 1.29 billion pounds.