HBOS is the first of the big five banks in UK to report a decline in bad debts but said  it was cautious about unsecured lending.

London February 28, 2007: UK banks are turning cautious while lending unsecured loans. HBOS bank is the first of the five big banks in UK to declare this. Lloyds and Barclays recently reported that its bad debts have increased considerably in 2006 but the rate of increase is starting to dwindle. HSBC and Royal Bank of Scotland have yet to unveil their results about the bad debts but all the banks have started being discreet in respect of granting unsecured loans.

HBOS acknowledged that it was relatively downbeat about unsecured lending where the amount of bad debts continued to rise to 13.2pc of the loan book from 11.5pc in 2005. Andy Hornby, Chief executive of HBOS said: "The growth of impairments in our unsecured book moderated in the second half of 2006. We remain cautious about future trends given the continued growth in UK personal insolvencies." Due to the increasing concern over bad credit defaults, HBOS has cut its unsecured personal loans by 4pc to £6.6bn with credit card lending also falling by 4pc to £7bn.