Banking group Abbey reports market share boost
A high-profile advertising campaign today helped banking group Abbey to claim a larger slice of the UK mortgage market.
The group, which is owned by Spain’s Santander, also took on new areas of business as its estimated share of gross lending improved to 9.4% in the first quarter of 2007, compared with 9.1% in the previous quarter.
Across the group, Abbey said it made a solid start to the year as its profits contribution to Santander's results increased 20% to £201m (€294m).
Trading expenses were 4% lower as a result of ongoing cost reductions, which started following the company’s acquisition by Santander in November 2004.
During 2006, around 2,000 full-time jobs were taken out of the business, leaving Abbey with 16,600 staff serving 712 branches. Santander said Abbey registered the greatest efficiency improvement within the group.
It is now looking to drive the revenues side of the business, with greater presence in areas such as investments, business banking and specialist buy-to-let mortgages. Abbey is best known for its strength in mainstream mortgages and savings.
As well as the advertising campaign, which targeted first-time buyers, Abbey said strong affordability and the launch of more buy-to-let products lifted gross mortgage lending to £7.5bn (€11bn) – 7% higher than a year earlier.
Capital repayments were 11% ahead at £6.2 billion, partly reflecting higher interest rates.
Abbey added that bad debt provisions in its retail banking arm were broadly in line with a year earlier, but ahead of the previous quarter. It said the increase was in line with expectations and due largely to its unsecured personal loan portfolio.
“We expect the level of provisions to be broadly stable throughout 2007,” the company added.
Santander’s revenues rose by 18% in the quarter, more than double the increase in costs, which grew by 7%. That meant attributable profit was up 21% to €1.8bn in the first three months of the year.
It said revenues growth was supported by strong activity in all businesses in Europe as well as in Latin America.
