大象传媒

Shell v HBOS

• Robert Peston
• 31 Jul 08, 08:09 AM

's 72% fall to 拢848m in its first half may sound dreadful.

And no company would enjoy seeing its earnings drop by more than 拢2bn.

But the decline is only slightly more than was the previous day by .

And things could have been worse.

HBOS's losses on its exposure to security markets knocked for six by the credit crunch have increased only a little to 拢1.1bn from the gruesome figure it disclosed only a few weeks ago, when it was raising 拢4bn of new capital in a rights issue.

Probably the most worrying trend is a rise of 拢225m in charges on mortgages where the borrowers are having trouble keeping up the payments.

And its mortgages classified as impaired have risen 21% to 拢5.1bn.

There was also a doubling to 拢469m in the charges for loans to companies that are going bad.

HBOS warns that losses on mortgage and corporate lending can only get worse.

How much worse. Well some clue is given this morning by the house-price stats issued by the .

These show that the averge house of a UK residential property have fallen 拢17,000 or 9% since the peak reached last October.

Which means that those taking out a 90% mortgage last autumn have now had more-or-less all their equity in their properties wiped out.

That's unsettling, but HBOS believes has sufficient capital to weather the storm that it expects to continue till at least the end of next year.

What a contrast with the fortunes of our energy and commodity companies, which are generating eye-watering volumes of cash from the rise in prices that is putting so much upward pressure on inflation and downward pressure on our economic growth prospects.

Take .

It has this morning that in just the three months to the end of June, its operating cash flow increased from $10.6bn to $15.9bn.

So in sterling terms, Shell generated three times as much cash in just three months as the profits earned by our biggest mortgage bank over six months.

That statistic is the flip side of the squeeze on living standards afflicting most of us from the rise in the cost of finance and the basics of living.

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