Abbey ahead in the banking race

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The Independent Online
THE banks' half-year reporting season is upon us, and already clear signs are emerging of the winners and losers. National Westminster, despite a seemingly impressive 14 per cent rise in pre-tax profits, was unanimously condemned by the market and commentators.

The shares probably remain a long-term hold, but there is little incentive to buy at this point. By contrast, Lloyds Bank continues to shine, despite (or because of?) its smaller size, and at 709p the shares remain attractive.

The other front-runner at this stage is Abbey National, which also produced a strong performance. Smith New Court rates the shares a buy, and it is hard to disagree. Abbey's market share of new mortgage business fell to 4 per cent, despite it having 12.3 per cent of outstanding mortgages in the UK. But it boosted life insurance sales by 11 per cent to pounds 52m, and earnings per share by 19 per cent to 24.7p. Even if the relative outperformance slows in the next year, the shares remain attractive at 534p.

ECLIPSE BLINDS' (18p) one-for-six rights and placing to raise pounds 4.2m has seen some pressure on the shares in the past few days. And a remarkable recovery by the company over the past year may suggest the shares' progress is likely to come to an end. But there is every reason to suppose there is good longer-term growth potential. Take up the rights.

THE story of Roumen Anton- ov is one to excite the interest of journalists, featuring as it does a former Bulgarian nuclear physicist.

After describing a new theory of quantum mechanics, he spent the next 16 years attempting to escape the authorities and emigrate. He did so and founded the company to exploit his patented invention for a new automatic transmission system for car gearboxes.

The company raised pounds 3.75m via a placing on the Rule 4.2 market at 40p a share. The shares recently hit 85p, having been 58p only a month ago. This is inevitable in a start-up situation of this kind, and one factor is a possible licence agreement from a big car manufacturer by the end of the year. If this happens, there is probably further upside.

The directors expect the shares to transfer to the AIM in due course, and this is one of the companies that market was set up to encourage: an idealistic start-up, representing talent, high hopes and high risks, but also the prospect of high reward.

STAGECOACH, the coach firm mauled by the Monopolies and Mergers Commission, made a robust defence of its style of business. The shares have clawed back all the ground they had lost since February when the inquiry was announced, and they seem to be shrugging off the implications of the report itself. Investors, it seems, have little to fear. Although the MMC may sharpen its teeth if it has to take action again in the future, its latest offering amounted to little more than a severe rap over the knuckles. At 243p, the shares remain a buy.

GRAMPIAN HOLDINGS is a funny conglomerate but nevertheless has the potential to provide investors with some serious returns.

A precipitate collapse towards the tail-end of last year saw the shares fall from 150p to 96p in two months. But they have since recovered to 136.5p, and broker Bell Lawrie White sees further strong growth over the next two years.

The mix of pharmaceuticals, transport, retail and sporting goods can all deliver, it says. At present, transport is the star division, with profits all but doubling to pounds 4m since 1991. Restruct- uring of the pharmaceuticals division should help, and Grampian could net a pounds 14m book profit on its stake in EWM, the retail chain due to list in 1996.