Halifax Bank of Scotland today said it was on course to beat forecasts for annual earnings.

In a trading update issued ahead of its annual meeting in Brighton, HBOS told shareholders it was confident of delivering underlying earnings per share ahead of the current market consensus. Shares rose 3% today.

The group, which is the largest provider of saving products in the UK, said its retail banking division had performed well with good growth in savings and for banking products.

The bank did experience a decline in its share of the lending market due to the timing of the end of term on some of its mortgage products, but said it would return to its normal range of between 15% and 20% in the second half.

HBOS said the overall credit environment had remained strong, although it added it had maintained vigilance on unsecured lending such as credit cards. During 2006, the bank racked up provisions on bad debts of £1.74 billion, representing 0.48% of average customer advances.

Insurance sales showed strong growth over the start of the year despite a fall-back in prices with household policies seeing particular strong volume growth.

The division took a knock last year after a decline in repayment insurance sales following a raft of criticism regarding the industry, which was subsequently referred to the Competition Commission for investigation by the Office of Fair Trading.

HBOS said its investment arm was set to deliver double digit growth while its international business had experienced "encouraging growth" in both lending and deposit taking.

HBOS, which has already returned £200 million to investors this year, said it would continue with its share buyback programme as it continued to generate surplus capital.

Andy Hornby, chief executive, said: "Trading so far this year across the breadth of the business confirmed our confidence that 2007 will be another good year for sustainable value creation for shareholders.

"We are confident of delivering underlying earnings per share ahead of the current market consensus of 107.4p".

HBOS, along with the other main high street banks, has come under fire over the last year from campaigners and the OFT for its high penalty charges. It said at the time of its results in February that the implementation of lower default and late payment fees last August would impact its annual fee income by £60 million this year.