Halifax could hand pounds 3.5bn war chest to investors

Halifax yesterday said it had a war chest of pounds 3.5bn to spend on acquisitions, however the bank promised to hand back its surplus funds to shareholders if it was unable to make a purchase at a sensible price.

Mike Blackburn, chief executive, said Halifax was looking to expand its interests in long-term savings, pensions and general insurance to complement its dominant position in the mortgages and savings market. However, he warned that "we don't like to overpay in Yorkshire" and said deals would only be considered if they fitted strategically and enhanced shareholder value.

He professed "no philosophical hang-ups" about handing money back to shareholders and would be happy to do so if the price of acquisitions was not right. No timetable was given for making purchases.

In its first results announcement since floating at the beginning of June, the former building society reported a 9 per cent rise in profits but said there would be no dividend payout until May 1998.

Mr Blackburn warned that the more people speculated about an acquisition, the less likely it would be.

He admitted that prices in the financial sector had run ahead of themselves as investors attempted to pick the next victim of acquisition-hungry groups such as Halifax.

Describing the surplus capital as a reflection of past success, Mr Blackburn said he would like to see the ratio of Halifax's Tier 1 capital to its total assets fall from its currently high 14.6 per cent to around 7 per cent. That would put the company in line with the rest of the banking sector.

Using up excess funds would also result in Halifax being able to report a higher return on the capital it employs in its operations. During the first half a return of 14.6 per cent was achieved, but Jon Foulds, the chairman, said the underlying return, excluding unutilised capital, was a more impressive 27 per cent.

Profits in the first half of the year rose from pounds 737m to pounds 802m, benefiting from last year's acquisition of Clerical & Medical. The result was within expectations but after an early rise the shares closed 15.5p lower at 1410.5p. Due to the still-fluid state of the share register, as institutions build stakes from the cashed-in windfalls of former members, the first dividend, for the full year, will not be paid until next spring.

Halifax saw interest margins and spreads narrow in the first half compared to last year but net new mortgage lending more than doubled to pounds 1.19bn, representing a market share of around 10 per cent.

The new bank said 23 per cent of its shares were sold by members on the first day of trading with the amount held by financial institutions rising to 31 per cent by the end of July.

Mr Blackburn said the Halifax business had stood up well in the first half, given the disruption and amount of staff and management time devoted to the flotation.

He noted that its non-traditional business was now 25 per cent of its income, which he hoped to raise to one third within four to five years, and to half over 10 years.

Mr Blackburn said Halifax had put in an exceptional performance in net new mortgage lending, which more than doubled compared with the first half of last year.

He said UK house prices were expected to rise around 7 per cent nationally this year but noted that outside the buoyant London and South-east England market, prices were often rising much more slowly.

PROMOTED VIDEO
News
REX/Eye Candy
science
News
A photo of Charles Belk being detained by police on Friday 22 August
news
News
i100
Sport
Alexis Sanchez celebrates after scoring his first goal for Arsenal in the Champions League qualifier against Besiktas
sportChilean's first goal for the club secures place in draw for Champions League group stages
Arts and Entertainment
Amis: 'The racial situation in the US is as bad as it’s been since the Civil War'
booksAuthor says he might come back across Atlantic after all
Extras
indybest
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Life and Style
Google Doodle celebrates the 200th birthday of Irish writer Sheridan Le Fanu
tech
Arts and Entertainment
Vinyl demand: a factory making the old-style discs
musicManufacturers are struggling to keep up with the resurgence in vinyl
News
i100
News
In Eternal Sunshine of the Spotless Mind Jim Carrey and Kate Winslett medically erase each other from their memories
scienceTechnique successfully used to ‘reverse’ bad memories in rodents could be used on trauma victims
Arts and Entertainment
Singer Pixie Lott will take part in Strictly Come Dancing 2014, the BBC has confirmed
tv
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

C# Developer (C#, ASP.NET Developer, SQL, MVC, WPF, Real-Time F

£40000 - £48000 per annum + benefits+bonus+package: Harrington Starr: C# Devel...

C# Swift Payment Developer (C#, ASP.NET, .NET, MVC, Authorize.N

£45000 - £60000 per annum + benefits+bonus+package: Harrington Starr: C# Swift...

DevOps Engineer - Linux, Shell, Bash, Solaris, UNIX, Salt-Stack

Negotiable: Harrington Starr: A fast growing Financial Services organisation b...

Trade Desk FIX Analyst - (FIX, SQL, Equities, Support)

£50000 - £60000 per annum + excellent benefits: Harrington Starr: An award-win...

Day In a Page

Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone
Amazon is buying Twitch for £600m - but why do people want to watch others playing Xbox?

What is the appeal of Twitch?

Amazon is buying the video-game-themed online streaming site for £600m - but why do people want to watch others playing Xbox?
Tip-tapping typewriters, ripe pongs and slides in the office: Bosses are inventing surprising ways of making us work harder

How bosses are making us work harder

As it is revealed that one newspaper office pumps out the sound of typewriters to increase productivity, Gillian Orr explores the other devices designed to motivate staff
Manufacturers are struggling to keep up with the resurgence in vinyl records

Hard pressed: Resurgence in vinyl records

As the resurgence in vinyl records continues, manufacturers and their outdated machinery are struggling to keep up with the demand
Tony Jordan: 'I turned down the chance to research Charles Dickens for a TV series nine times ... then I found a kindred spirit'

A tale of two writers

Offered the chance to research Charles Dickens for a TV series, Tony Jordan turned it down. Nine times. The man behind EastEnders and Life on Mars didn’t feel right for the job. Finally, he gave in - and found an unexpected kindred spirit
Could a later start to the school day be the most useful educational reform of all?

Should pupils get a lie in?

Doctors want a later start to the school day so that pupils can sleep later. Not because teenagers are lazy, explains Simon Usborne - it's all down to their circadian rhythms
Prepare for Jewish jokes – as Jewish comedians get their own festival

Prepare for Jewish jokes...

... as Jewish comedians get their own festival
SJ Watson: 'I still can't quite believe that Before I Go to Sleep started in my head'

A dream come true for SJ Watson

Watson was working part time in the NHS when his debut novel, Before I Go to Sleep, became a bestseller. Now it's a Hollywood movie, too. Here he recalls the whirlwind journey from children’s ward to A-list film set
10 best cycling bags for commuters

10 best cycling bags for commuters

Gear up for next week’s National Cycle to Work day with one of these practical backpacks and messenger bags
Paul Scholes: Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United

Paul Scholes column

Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United
Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?