The new owners of Abbey National said today the turnaround of the bank was under way after revenues stabilised and profits held firm in 2005 so far.
Spanish bank Santander Central Hispano stuck by the view that it would take three years to “fix” the business, but said it was encouraged by the positive progress made since its £9.5bn (€13.8bn) takeover of Abbey in November.
Around 3,000 jobs have been removed and Abbey said £101m (€146.3m) of costs have already been eliminated – ahead of its original plan and putting it on course to beat its revised target of £150m (€217m) of savings this year.
It expects to take out a further 1,000 positions by the end of December after upping its target for job cuts at the time of its first-quarter results in May.
Abbey said it was rebuilding its position in mortgages and had a 9.2% share of the market for gross lending in the first half compared with 8.2% over the final six months of 2004.
In its core banking business, Abbey said sales of bank accounts, credit cards, unsecured loans and investment products were all higher than a year ago.
Pre-tax profits of £294m (€425.9m) for the six months to June 30 virtually matched its performance at the same stage of 2004. The figure included the impact of £91m (€131.8m) of reorganisation costs and other charges.
Chief executive Francisco Gomez-Roldan said: “Eight months on from the acquisition, we are firmly on track. We have made excellent progress on costs and a good start on revenues.
“But this is only the start – turning Abbey around will take three years and there are still many things to fix.”
Challenges facing the bank include improving service levels and reducing staff turnover, while ensuring that it can profitably replace existing business such as mortgages when customers have paid off their loans.
Santander has already focused on training bank staff to sell a wider range of products and the number of authorised Abbey employees in branches has risen by 14%.