Lloyds Bowmaker Finance, whose pounds 2.9bn loan book includes pounds 1.2bn of first and second mortgage lending, suffered pounds 55m of bad debts, mostly housing related. Although that was higher than the pounds 46.3m of bad debts in the first six months of 1991, it was a pounds 5m improvement on the previous half.
Bowmaker's pre-tax profits declined from pounds 15.6m to pounds 4m, the largest factor behind a 5 per cent drop in group pre-tax profits to pounds 142m. Sir Simon Hornby, chairman, said Bowmaker was seeing a slow revival in the demand for new loans other than for housing.
The housing market also hit Abbey Life, still the larger of the group's two UK life insurance operations, which sells through a 3,500 direct sales force. Abbey's mortgage-related sales of regular premium life policies fell by 17 per cent to pounds 7.2m, contributing to a 5 per cent fall to pounds 44.3m in total regular premiums, and a 2 per cent decline in a weighted measure of regular and single premium sales. Abbey's profit contribution fell from pounds 71.3m to pounds 67.8m.
However, Black Horse Financial Services, which sells through Lloyds Bank branches, continued to make rapid progress. Regular premium sales increased by 15 per cent to pounds 34.3m and the weighted measure by 25 per cent to pounds 65.2m - for the first time beating the pounds 55.2m achieved by Abbey Life.
Profits from BHFS jumped by 32 per cent to pounds 51m. Stephen Maran, chief executive of Lloyds Abbey Life, said sales by BHFS were at least twice as profitable as Abbey Life sales. BHFS salesmen were much more productive because they were selling to 'warm leads'. Mr Maran said pricing of BHFS products was 'competitive and no more than that'.
The group again made it clear that it was not prepared to devote more resources to its small subsidiary in Germany, where tight regulation made it difficult to make a decent return.
The group's 394 estate agencies made a loss of pounds 2.3m after suffering a 17 per cent fall in the number of houses sold.
Lloyds Abbey maintained the interim dividend at 6.3p a share. Sir Simon said he could not see any chance of an increase in the dividend for the year, nor could he see any chance of a cut.Reuse content