Leap to £252m as Abbey cashes in on woes of rivals
The flight to safety by borrowers and savers as High Street banks have failed and been nationalised has proved a huge boost to Spanish-owned Abbey as consumers flooded to its branches and online accounts in the last three months.
The former building society, which was taken over by Banco Santander for £8 billion four years ago, posted a 20% jump in third-quarter profits to £252 million as it continued to dominate High Street savings and lendings.
Chief executive Antonio Horta-Osorio today welcomed the Government's £37 billion bailout of the UK banking system, but again said Abbey "won't be using it".
Today's figures do not include Santander's recent £612 million rescue takeover of Bradford & Bingley or the £1.3 billion takeover of Alliance & Leicester. These will make the business the UK's third-largest deposit-taker with 1300 High Street branches, 4500 cash machines, 10% of the savings market and 13% of the mortgage market.
Horta-Osorio said: "We will continue to grow our business and remain a challenger in the UK market with attractive offers such as high-interest accounts, strong savings rates and good mortgage deals. It is our intention to make the full range of competitive, value-for-money products available to every one of our 24 million UK customers."
Abbey has been picking up a huge share of borrowers forced to move from their banks when their fixed-rate mortgages ended. While its share of net mortgage lending came down from 42.2% in the second quarter to 28.3% in the third, that is still way ahead of a year ago when it stood at 10.8%.
Horta-Osorio said the bank expects total UK mortgage lending this year to be £50 billion down from the record £108 billion seen in 2007. Abbey is also steadily increasing the number of current-account openings. Over the first nine months of the year, it has seen a net inflow of savings of £4.3 billion, 70% up on the same period in 2007. There was also an inflow of £1.5 billion from corporate customers.
Parent Santander reported a 16% rise in profits to €6.93 billion (£5.6 billion) and said shareholders will get a 10% dividend rise.
