A&L profits from lending share boost

ALLIANCE & LEICESTER has bucked a gloomy trend among converted building societies by boosting its share of the mortgage market since becoming a bank.

The bank's share of net lending rose by nearly a quarter from 4.5 to 5.5 per cent in the first half of the year. The building society became a bank in April 1997.

The rise was in stark contrast to the Woolwich and Halifax, both suffering the effects of borrowers redeeming mortgages after conversion. Both have seen their shares of the market shrink to around a third of their normal size.

A&L's success in boosting market share appears to support a theory that smaller building societies have had greater success in converting to banks than their larger rivals.

Richard Pym, the finance director, said: "It is much harder for Halifax and Abbey National to defend a 20 or 15 per cent share than it is for us. It is easier to attack from a lower number.

"What we did was to get ourselves in order. We organised our sales effort much better and were more consistent in our approach to the market. It was a better sales effort."

A&L followed a similar pattern to Northern Rock, another of the smaller converted societies, in capturing business from the bigger lenders.

The bank moved heavily into fixed-interest mortgages, once a small fraction of its loan portfolio. In the first half of 1998, fixed-interest loans made up 66 per cent of its loans extended.

Mr Pym said the charge levelled against Northern Rock - that it may have sacrificed profitability for bulk sales of cut-price mortgages - did not apply to A&L. "We stick to minimum profit criteria for each particular product," he said.

Headline profits jumped by 29 per cent to pounds 230m. Underlying profits, excluding pounds 28m of conversion costs last year, showed a more modest 12 per cent rise. The shares rose by 19p to close at 868p.

Interest income was boosted by higher interest rates and a big increase in unsecured lending through the bank's personal finance arm, which extends small-ticket personal loans to customers.

Unlike Woolwich or Halifax, Alliance & Leicester is resisting pressure from the City to use its spare capital of pounds 700m for a share buyback programme. Instead, the money is being held back for possible acquisitions.

Mr Pym said A&L was currently "very underleveraged" and would seek acquisitions only if they allowed new products to be introduced to A&L customers. "What we are interested in is either increasing our customer base or bringing additional products to our customer base."

In what was a veiled swipe at rival mortgage banks, he added: "The thing we are not interested in is acquisitions overseas. The real reason UK banks go overseas is boredom. The whole history of it is that they get absolutely suckered by the locals, just the same as continental banks coming to the UK. You end up as lender of last resort to the natives."

PROMOTED VIDEO
News
Teeth should be brushed twice a day to prevent tooth decay
education
News
Bryan Cranston as Walter White, in the acclaimed series 'Breaking Bad'
news
Sport
footballChelsea 6 Maribor 0: Blues warm up for Premier League showdown with stroll in Champions League - but Mourinho is short of strikers
News
Those who were encouraged to walk in a happy manner remembered less negative words
science
Arts and Entertainment
Princess Olga in 'You Can't Get the Staff'
tvReview: The anachronistic aristocrats, it seemed, were just happy to have some attention
News
Renee Zellweger as Bridget Jones
i100
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
tech

Board creates magnetic field to achieve lift

News
There have been various incidents of social media users inadvertently flouting the law
news

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
News
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
i100
Sport
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London