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Abbey lending rises but share falls

Lending rose at Abbey National for the first half of this year but its market share fell and group profits dived by more than a third to £697m from £1.054bn in the same period last year.

The results&#39 announcement came days after chief executive Ian Harley quit.

The group says its wholesale banking division is partly responsible for the disappointing results.

Wholesale banking profits plummeted to £50m from £307m and operating expenses increased by 25 per cent to £106m from £85m.

Gross mortgage lending climbed by 23 per cent to £9.2bn from £7.5bn but market share fell from 10.6 per cent to 9.4 per cent.

Profits from retail mortgages and savings were down by 3 per cent to £455m from £468m, which it says is due partly to lower commission from sales of with-profits products through Abbey National branches. The company says it has focused on value rather than volume for its mortgage operation.

Its wealth management and long-term savings division, including Scottish Mutual, Scottish Provident, First National and Cahoot, made a profit of £170m, an increase of 55 per cent from £110m last year.

Profits for Scottish Mutual&#39s profits edged up from £63m to £64m while Scottish Provident contributed £52m in profits but incurred integration costs of £13m.

The results reveal that Scottish Mutual received two tranches of capital injection of £150m and £175m from its parent in June.

Chairman Lord Burns says: “There are still tough challenges to overcome but we are tackling these. The executive team is determined to deliver the changes that will increase value for our shareholders.”


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