Abbey to continue mortgage lending
Santander, the owners of the Abbey, Britain’s second biggest lender, has predicted a growth in the UK mortgage market. The Spanish banking group has reported a 25% jump in its quarterly profits and Abbey’s chief executive Mr Horta-Osorio, said that although it would initially be a modest growth he was “prudently optimistic” and said that business was better than he thought with less people becoming employed and home prices predicted to fall by only another 10% during the year, which was less than anticipated.
Mr Horta-Osorio said that the 25% increase in pre tax profits to £372 million for the first three month of the year was despite bad debts reaching £189 million in the same period, the previous three month’s figure was £90 million.
Santander also bought the Alliance & Leicester for £1.3 billion last year as well as Bradford & Bingley’s lending book and both these additions to the company added to its profitability with healthy loan books. Abbey has increased its lending to homeowners by £800 million but had taken a similar amount in deposits from savers which meant it did not need to buy currency on the open market where prices have reached record levels. Mr Horta-Osorio said “As people bank with us, it drives up revenues, bringing down the cost/income ratio”. Santander’s shares rose from Euros 0.40 to Euros 6.96.
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