Sainsbury's bank proves a hit with customers

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The Independent Online
J Sainsbury, the supermarket giant, yesterday revealed that its new bank was proving a big hit with customers, attracting more than 10,000 accounts a week. Sainsbury's bank, which was opened less than a year ago, now has more than 600,000 accounts with deposits of more than pounds 1.4bn.

Sainsbury's appears to have fought off a strong challenge from Safeway, which recently launched an account offering 7.4 per cent interest, higher than the 6.5 per cent offered to Sainsbury's customers. Mike Dennis, food retailing analysts at SG Securities, said: "This is a great performance from the banking business. Their account is easier to run than Safeway's and they have a more loyal customer base."

Sainsbury is now looking to rapidly expand its banking business. A Sainsbury spokesman said: "We are looking to build up our personal loans and mortgage business, lending more of the money we have on deposit."

There was also a strong performance from Homebase, the DIY retailer, where buoyant Christmas trading helped like-for-like sales rise 9.8 per cent. The good figures spread optimism around the DIY sector. Shares in Boots, owner of Do it All, jumped 38.5p to 893p, and Kingfisher, which runs B&Q, rose 16p to 987p.

However Sainsbury, once Britain's most popular grocer, is falling further behind arch rival Tesco which is now by far the biggest food retailer in the country with more than 15 per cent of the market. Like-for-like supermarket sales growth slowed to 3.2 per cent in the 16 weeks to 10 January, compared to the 5 per cent growth the company was achieving last year.

The figure is well short of the 6.5 per cent that Tesco announced recently. But Sainsbury said gross margins had held firm. "They're a good set of results, it's just that Tesco's results were better. So its `not bad, could do better'," said Clive Vaughan of research group Verdict.

Sainsbury said that its 24 hour opening programme over Christmas has proved very popular with customers and it planned to extend the scheme. "Our customers are telling us that it made shopping easier and lead to shorter queues at the check out."

The group also plans to open 18 new stores this year and 19 next, including 3 more stores in Northern Ireland as it seeks to expand outside England.