Abbey has out-mortgaged Halifax to become the UK's biggest lender, today announcing profits significantly ahead of last year's and a trebling of its mortgage business.
In the first six months of 2008, Abbey – owned by the Spanish bank Santander – claimed about a quarter of all new mortgage
business, 15.9 per cent in the first quarter and shooting up to 40 per cent in the second.
Abbey said that its high profits are due to "strong performance across all four business divisions: Retail Banking, Private banking, Corporate Banking and Global Banking Markets."
"Since September 2006, we have been managing the profitability of our mortgage business, carefully maintaining a balance between the margin of new business, prudent lending criteria and our market share aspirations." said Abbey's chief executive António Horta-Osório.
While its rivals have suffered losses from the credit crisis, and cut back on lending, Abbey
sold three times as many mortgages as in the same period in 2007, with profits increasing £3.58billion on last year to £4.87billion.
Abbey said that it was largely protected from the problems in the bad credit mortgage
market suffered by many of its peers, because it had "little or no exposure" to the risky mortgage-backed securities. Meanwhile, Halifax – part of the HBOS group – is expected to feel a 50 per cent hit to its profits, seeing them drop to £1.3billion.
"We held back our market share during the first-half of last year when the market was writing low margin and higher-risk business." Mr Horta-Osório continued. "Since then the market has reduced and we have taken the opportunity to take higher margin, low-risk business, and at the same time improving our customer retention."
He added: "Our profitable lending growth has been balanced with a prudent risk approach targeting lower LTV business and continued reduction of our unsecured portfolio. We have a high quality risk profile as Abbey's mortgage book is made up of prime-residential lending. The quality of our lending will continue to be based on affordability and robust risk management."
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