Cost cuts boost Abbey profits

By THIS IS MONEY
Updated: 09:26 EDT, 26 October 2006

Abbey posted a 31% hike in profits today after slashing around 1,800 jobs as part of a cost-cutting drive.

The bank, which is owned by Spain's Banco Santander Central Hispano, reported net profits of 743m euros (£499m) in the nine months to September 30.

Santander banked net profits of 4.8bn euros (£3.2bn) - a rise of 28% - which it said was due to cost cutting at Abbey and lending revenues from Latin America.

The Spanish firm has cut 5,800 jobs since its £9bn takeover of Abbey two years ago, including 1,800 this year.

Abbey chief executive Antonio Horta-Osorio said 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.

Abbey, which is the UK's second largest mortgage lender, said net mortgage lending rose 20% to £1.8bn in the third quarter compared to a year ago. This was a 6% share of the market.

Bank account openings were up 26% in the quarter with adult account openings up 21%.

Mr Horta-Osorio replaced former chief executive Francisco Gomez-Roldan, who died in July at the age of 53.

Mr Gomez-Roldan was credited with turning around the fortunes of Abbey and helping it to bank profits of £596m in 2005 following losses of £21m in 2004.

Abbey's roots date back to 1849, with the establishment of the National Freehold Land and Building Society. In 1944, it merged with the Abbey Road Building Society to form Abbey National.

In July 1989, it was the first building society to convert to plc status and to be floated on the London Stock Exchange.

It was acquired by Santander, Spain's largest financial group, in November 2004.