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Buoyant Abbey bucks the trend of despair
Nick Goodway05.02.09
Abbey today gave what is likely to be a rare upbeat view of business last year when many of its rival UK banks were driven into the hands of the Government or foreign investors.
António Horta-Osório, chief executive of the former building society which in the final quarter of last year swallowed up its former rivals Alliance & Leicester and Bradford & Bingley, said: "2008 has been an excellent year for Abbey." But he cautioned that the coming year will be tough.
Even ignoring the effects of the takeovers, Abbey said statutory profits grew by more than 20% to £991 million last year as savers fled to safe havens and it took advantage of other UK banks' reluctance to lend to boost its presence in the mortgage and small business loans markets.
Abbey, bought by Spain's Santander Bank for £8 billion five years ago, said it captured almost 30% of the new mortgage market in the UK last year, almost treble its level in 2007. Longer term, its share of the gross mortgage lending market rose from 9.8% to 12.4% - well up with its signalled plans.
The Spanish have long said they wanted to capture a 10%-plus share of the UK's mortgages, savings bank accounts and branches. With the £1.3 billion takeover of A&L and the £400 million B&B deal, when the Government took the "bad bank" and sold the "good bank", it has comfortably achieved its initial ambitions. But Horta-Osório injected a heavy degree of caution, saying "2009 will undoubtedly be a challenging year" and confirming that the combined three banks will axe 1900 staff in the coming year.
Abbey also saw a sharp rise in repossessions and mortgage borrowers who are now three months behind with payments jumped from 7814 to 10,897.
Parent bank Santander also saw a sharp rise in provisions against bad loans across its business in Spain and Latin America as well as the UK. These were up by more than 60% last year to €14.2 billion (£12.6 billion).
The bank was forced to issue its profit figure last week after it said it would compensate private investors it had put into fraudster Bernie Madoff's funds. Net profits rose 9% to €8.9 billion.
Santander said that following the takeovers this country now makes up one-third of its total customer loans.
Reader views (5)
If Abbey can make a good profit surely this exposes the lie that global conditions have wrecked the banks. It is clearly greedy bankers who wrecked their own banks. The govt should let the bad banks go bust, it is the capitalist bankers way afterall.
- A J Wilson, wokingham, UK
Alliance & Leicester was actually a well-run bank with good customer service, good VFM and minimal sub-prime exposure. But the rumour mill spread so much unease that the share price plummeted, much to Santander's gain.
The grapevine indicates that the consolidation is going to be particularly painfull; even in a recession, staff may feel it better to jump ship rather than put up with Santander's reputed macho management style. If A&L loses its biggest asset, its people, then Santander's star might not burn so brightly.
- Insider, UK workforce
They are a joke, Shabby Abbey hardley ever passes on the rate reductions to SVR mortgage customers. They also never make their decision until about 2 weeks after the Bank of Englands annoucement so the heat is off them and it is no longer headline news when they fail to pass on the cut. I cannot wait to switch lenders when the market improves. Stay away from SHABBY ABBEY if you can.
- George, London
That's why we need foreigners working in our country, it might just make us all wake up, stop blaming others and do OUR jobs properly instead of dropping our standards as we have been in many areas over the years. Should we ban foreign bankers working in the UK or give jobs to those UK bankers that have ruined the financial system in this country and that all us tax payer's will now for many years to come ?
- Paul, London
Perhaps Abbey will now have enough money to spend on employing better trained staff. The dire service received from Abbey call centres is now a national joke.
- Simon Ellis, London
