Abbey sees 31% profit growth, outperforming Spanish parent

Published on Friday 27 October 2006 01:25

HIGH street bank Abbey National has reported a 31 per cent hike in profits, slightly ahead of growth at its Spanish parent, Banco Santander.

Net profits in the nine months to the end of September totalled 743 million (498.5m), while Santander banked 4.8 billion - a rise of 28 per cent.

The group has benefited from cost cutting at its British operation and strong lending revenues from Latin America.

Santander has slashed 5,800 jobs since its 9bn-plus takeover of Abbey two years ago, including around 1,800 in the current year. It has vowed to strengthen the core banking and mortgage lending operation.

During the summer, fast-growing assurer Resolution secured a 3.6bn deal for the closed-life funds of Abbey - home of Scottish Mutual and Scottish Provident.

Abbey chief executive Antonio Horta-Osorio said yesterday that the UK bank was continuing to benefit from Santander's expertise and best practices.

"Revenue growth is being sustained through increased sales capacity and sales productivity and we are on track to meet our 300m cost reduction target by the end of 2007," he said.

"We have completed the sale of our life businesses and created a new division, Wealth Management, to push forward our ambitious plans in the UK investment market."

Horta-Osorio replaced former chief executive Francisco Gomez-Roldan, who died in July at the age of 53 following a long illness. Gomez-Roldan was credited with transforming the fortunes of Abbey - moving it out of the red. The UK's second-biggest mortgage lender said net mortgage lending rose 20 per cent to 1.8bn in the third quarter compared to a year ago, giving it an estimated market share of 6 per cent. Bank account openings at 127,000 were up 26 per cent on 2005.

Santander makes much of its money in Latin America. During the first nine months of the year, net profit in the region rose 33 per cent.

Group chairman Emilio Botin is reckoned to be one of Spain's most powerful businessmen.