Total profits before tax fell back to £5.47 billion, with its retail business taking a significant hit as a result of increasing costs on the wholesale market, however after tax the group ended up 4 per cent in profit.
Mortgage lending was said to have picked up in the latter half of the year after getting off to a 'disappointing' start, seeing the group tighten its hold over the market with a substantial 22 per cent share - a 14 per cent increase attributed to customer retention.
However HBOS said it will continue to place the emphasis on 'profitable' lending rather than swelling its current hold over the market.
Andy Hornby, HBOS chief executive, said: "With our multi-brand distribution strength, strong balance sheet and low cost operating platforms, we are well placed to take opportunities presented by these difficult markets and deliver good growth in shareholder value over the next few years."
Although he warned that the precedent setting OFT test case involving overdraft charges would potentially affect the profitability of the business going forward.
The group added that it was not expecting a serious downturn in the UK housing and mortgage markets.
