A five-fold increase in impaired loans and a four-fold increase in loan write-offs have dented, but not devastated, the earnings of HBOS Australia, a banking business now owned by Lloyds TSB.Financial statements for HBOS Plc, and published separately by Lloyds on Friday, show that the underlying profit from the retained operations of HBOS in Australia fell to £116 million in the year to December 2008 down from £205 million in 2007.Impaired loans increased to £685 million at December 2008 from £333 million at December 2007. Impaired loans increased to 5.35 per cent of loans up from roughly 2.5 per cent a year earlier (and by taking a guess about the split in the level of bad loans between HBOSA and Bank of Western Australia before the sale of that business).Impairment provisions increased to around £200 million from £100 million while the charge for bad debts increased to £345 million from £81 million. Lloyds said 41 per cent of the HBOSA loans were in construction and property, a sector where loan losses are affecting many banks.Interestingly the HBOS results show that 10 per cent of loans in Australia are still classed as "other personal lending", and presumably sourced through the Capital Finance brand. Lending under the Capital Finance brand increased five per cent over 2008.In a rare piece of management commentary in the results Lloyds noted that Capital Finance "has tightened credit criteria across all sectors but has seen an increase in impaired loans, particularly within the property construction portfolio. There were also a couple of metrics published on the insurance and investment business, St Andrews, sold in December 2008, along with BankWest, to Commonwealth Bank.Lloyds said gross written premiums from the sale life insurance products through St ANdrews increased 67 per over 2008, with monthly sales of regular premium policies up by 181 per cent by the time of the sale of the business to CBA.Insurance sales through the east coast branch network of BankWest contributed 10 per cent of new premium written.Lloyds incurred a loss of  £845 million, including the write off of £240 million of goodwill, from the sale of BankWest and St Andrews  to Commonwealth Bank.