Halifax and C&G poised for rises: Falling provisions against arrears and repossessions to boost results

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TWO OF Britain's biggest building societies, Halifax and Cheltenham & Gloucester, will announce dramatically improved half-year profits this week on the back of falling provisions against mortgage arrears and repossessions.

The only brake on C&G's profits, to be announced on Thursday, will be the extent to which its management will be reluctant to cut bad debt provisions. Too high a profit figure might prompt accusations that Lloyds Bank's pounds 1.8bn offer for the society is too low.

C&G's 1.4 million customers will be sent details of its proposed takeover by Lloyds in February 1995 in the form of a transfer statement. Six months later customers will vote on the deal which, if successful, will make Lloyds Britain's fifth-biggest mortgage lender.

C&G made pre-tax profits of pounds 75.3m in the six months to June 1993. The society, ranked number six by size in the UK, saw a leap in provisions against bad debts from pounds 72m to pounds 211m in 1992, partly because of the acquisition of a number of other societies, including Heart of England. This figure fell to pounds 76m last year and is expected to fall further in 1994.

Halifax, Britain's biggest building society, will announce interim results on Wednesday - last year's were pounds 411m. Its bad debt provisions peaked in 1992 at pounds 373m and fell to pounds 271m last year.

Both societies' results are expected to confirm last week's house price surveys, which showed that house prices in the UK were still stagnant.

Building societies and banks are awaiting the publication of the second part of a Treasury report into building society accountability.

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