Halifax pays price of keeping customers

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The Independent Online

Shares in Halifax, the retail bank, fell nearly 5 per cent yesterday after James Crosby, the chief executive, said that he is ready to go on sacrificing margins rather than concede any more of the mortgage and savings market to rivals.

Shares in Halifax, the retail bank, fell nearly 5 per cent yesterday after James Crosby, the chief executive, said that he is ready to go on sacrificing margins rather than concede any more of the mortgage and savings market to rivals.

Speaking as he unveiled a 21 per cent rise in profit to £885m pre-tax, Mr Crosby said that efforts since February to keep customers by offering them better deals to stay put were bearing fruit.

Net new lending doubled over the first half to £2.4bn, giving Halifax a market share of 12 per cent, ahead of the group's 10 per cent target, and the highest share of the market since the former building society went public in 1997, but still below the 17 per cent share of existing mortgages.

However, Mr Crosby admitted that the price was a 5 per cent fall in margins with a further 10 per cent anticipated by 2001 when he expected margin erosion to peak.

"In the past we have been guilty of sitting back and letting others do to us what we should be doing to them," Mr Crosby said. "We have to draw a line in the sand."

As part of the customer retention plan, Halifax is contacting 225,000 customers a month and offering them better value products within the Halifax range.

Some 10 per cent of those contacted had responded, with many of them moving to so-called tracker mortgages which follow the ups and downs of the Bank of England base rate.

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