HBOS Australia increased underlying profit before tax by 11 per cent in 2007, despite its heavy investment program in BankWest retail branches and business banking centres.According to information on the Australian operation in the HBOS PLC 2007 results announcement, released yesterday, pre-tax profit rose from ₤278 million to ₤308 million.Operating expenses were up 34 per cent to ₤409 million as a result of spending on eight new retail branches and 13 business banking centres.HBOS is claiming to have the fastest growing business bank in Australia, with a 54 per cent increase in commercial lending and a 52 per cent increase in deposits. Overall, lending in the Australian operation increased by 24 per cent and deposits by 30 per cent.The parent company said it was happy with the progress of the big Australian branch rollout program, which would continue this year. It said the policy of launching "hero" products, such as TeleNet Saver, would continue.The net interest margin fell from 2.33 per cent in 2006 to 2.15 per cent last year. Impairment losses as a percentage of average advances rose from 0.27 per cent to 0.28 per cent. Loans and advances to customers stood at ₤33.2 billion. Thirty nine per cent of advances were home mortgages provided to individuals.