UK: Abbey set to be named top mortgage firm
Spanish-owned high street lender Abbey is this week expected to show it has toppled the Halifax as Britain’s biggest mortgage company.
Results from Abbey due on Tuesday will reportedly reveal the business won more than 25% of all new mortgages sold in the first six months of the year, allowing it to seize the top spot held by the long-time leader, HBOS-owned Halifax.
Abbey, which is part of Spain’s Santander, said recently it had enjoyed a high share of the market during 2008 because it had “little or no exposure” to the complex mortgage-backed investments hindering its rivals.
While other lenders have been scaling back lending amid the credit drought, Abbey trebled its share of new mortgages, to 15.9% in the first quarter of 2008 from just 4.9% a year earlier.
The Mail on Sunday said results for Abbey are expected to show profits rising to £4.87bn (€6.2bn) in the first six months of the year, up from £3.58bn (€4.54bn( in the same period last year.
In contrast, HBOS profits are forecast to drop by more than 50% to £1.3bn (€1.65bn), with the results hit by provisions taken against investments in US sub-prime mortgages and other products.
The Observer said the bank was also expected to disclose rising bad debt charges linked to a rising tide of repossessions of British properties.
The figures will increase the pressure on HBOS in the wake of its £4bn (€5.1bn) rights issue, when underwriters were left with stock after less than 9% of the shares were taken up by existing shareholders.
A number of institutional investors are said to want the bank to sell assets to bolster its balance sheet. This could include its 60% stake in wealth manager St James’s Place.
Shares in HBOS jumped last week amid rumours JP Morgan wanted to lead a break-up of the banking group.
HBOS may raise £300m (€381m) through the sale of Hill Hire, the Bradford-based vehicle hire business owned by the bank’s investment arm. HBOS took Hill Hire private in 1999 for £74m (€94m), but is now thought to have appointed Grant Thornton to find potential buyers, most likely from private equity.
The move is not thought to be connected with raising capital.
The company’s results are due on Thursday, with figures from Lloyds TSB scheduled for Wednesday and Alliance & Leicester on Friday.
A&L agreed to a £1.26bn (€1.6bn) takeover by Santander earlier this month.
Santander plans to merge the former building society with Abbey – which it bought in 2004 – creating a business with 959 UK branches and a share of more than 8% of the savings and personal loans market.
Abbey relies on money markets for only 10% of its lending and has no exposure to sub-prime mortgages. Abbey has funded the lending through increased customer deposits and sales of its treasury investments elsewhere in the business.
