Feb. 12 (Bloomberg) -- HSBC Holdings Plc, the world's second- largest bank by market value, Barclays Plc and five other U.K. banks will say second-half profit rose, a Bloomberg survey shows, buoyed by a surge in household and mortgage borrowing.

The lowest U.K. interest rates in half a century last year led to a boom in consumer borrowing. In the third quarter it increased by the largest amount since the Bank of England started collecting such data in 1993. U.K. mortgage lending rose by 24 percent last year, according to the Council of Mortgage Lenders.

``We've had phenomenal consumer expenditure and borrowing over the last 12 months,'' said Michael Gifford, a fund manager at Isis Asset Management in London, which oversees the equivalent of about $119 billion. He declined to say what stocks the fund holds. ``Bad debts may well be the story going forward.''

Bankruptcies rose to a 10-year high last year.

The British government forecasts the nation's economy will expand 3 percent to 3.5 percent in 2004. That compares with a European Central Bank projection of 1.8 percent growth for the 12 nations that share the euro.

The biggest increase in second-half profit will be reported by Lloyds TSB Group Plc, the U.K.'s fifth-largest bank by assets, according to the Bloomberg survey of nine analysts. Net income probably rose more than three times from the year-ago period.

The London-based lender's profit slumped 40 percent in the year-earlier half after bad debts jumped. Earnings this year will be bolstered by the proceeds from the sale of units in New Zealand and Brazil, which will contribute about 900 million pounds ($1.6 billion) to net annual income, the bank said in December.

HSBC, RBS

The lender will release its earnings March 8.

HSBC, which reports on March 1, may post a 51 percent rise in second-half net after its $15.5 billion purchase last March of Household International Inc. gave it 50 million U.S. customer. Barclays, which reports today, may report a 34 percent rise on increased lending and higher investment banking profit.

Royal Bank of Scotland Group Plc probably will post a 32 percent rise in income before making its final payment of 1.4 billion pounds for National Westminster Bank, which it bought for $36 billion in March 2000. RBS agreed to pay part of the purchase price out of future earnings. Second-half net after the payment probably declined 33 percent, according to the survey.

HBOS Plc, the U.K.'s fourth-largest bank by assets, will probably post a 31 percent rise on Feb. 25, while Abbey National Plc, the second-largest mortgage lender, may say its loss narrowed in the second half to 64.5 million pounds, from 1.4 billion pounds a year earlier, according to the survey.

Bankruptcies

The Bank of England has raised its benchmark rate twice since November by a total of 0.5 percentage points to 4 percent in a bid to slow borrowing. The increases also may lead to an increase in bankruptcies, crimping earnings by U.K. lenders.

The number of personal insolvencies in England and Wales increased 19 percent last year to 36,328, the Department of Trade and Industry said. For the fourth quarter, the seasonally adjusted total was 10,271, a 12 percent increase from the previous quarter and a 29 percent jump from the year-earlier period.

Following is a table of full year and second-half net income estimates. Bloomberg calculates second-half estimates by deducting published first-half net income from the median full- year estimate of analysts surveyed. Banks are identified by Bloomberg tickers.

All figures are in millions of pounds except for HSBC and Standard Chartered, which are in millions of dollars

         ANL   AL/  BARC    BB/   HBOS  HSBA   LLOY   RBS  STAN
FY2002 -1198   340  2230  171.6   1916  6239   1781  1971   844
FY2003 E-210   374  2709    182   2434  8564   3252  2173   944
% Change  NA    10    21    6.1     27    37     83    10    12

2H2002 -1435   171   993   81.9    968  2959    66    635   428
2H2003 E -64   184  1326   89.8   1271  4458   209    428   455
% Change  NA   7.6    34    9.6     31    51   216    -33   6.3

1H2002   237   169  1237   89.7    948  3280   1113  1336   416
1H2003  -146   190  1383   91.7   1163  4106   1155  1745   489
% Change  NA    12    12    2.2     23    25    3.8    31    18

The following banks participated in the survey: CSFB, Merrill Lynch & Co., Citigroup's Smith Barney, Goldman Sachs Group Inc, UBS AG, Lehman Brothers, Commerzbank AG, BNP Paribas SA, Societe Generale SA.

To contact the reporter on this story: Jonathan Rosenthal in London at jrosenthal1@bloomberg.net

Last Updated: February 11, 2004 19:10 EST