Abbey back in profit after Spanish takeover

The turnaround of Abbey National looked on track today as it bounced back into the black in its first full year of Spanish ownership.

The bank – bought by Banco Santander Central Hispano in November 2004 for £9.5bn (€13.8bn) – said it had turned pre-tax losses of £21m (€30m) in 2004 into profits of £596m (€868m) last year.

Trading profits before tax, which strip out the costs of restructuring the business under Santander, were up 34% to £775m (€1.1bn).

In a trading statement, Abbey said it had slashed costs through thousands of job cuts and increased revenues at its branches.

Abbey initially expected the overhaul by Santander to save it £100m (€145m) in 2005 but the target was raised to £200m (€291m) in October. Today Abbey said savings reached £224m (€326m) for the year following 4,000 job cuts with more to come.

The lower costs combined with better-than-expected revenues which increased slightly from £2.5bn (€3.6bn) in 2004 to £2.52bn (€3.66bn) in 2005.

Abbey chief executive Francisco Gomez-Roldan said: “Today’s results clearly show that we are on track in our efforts to turn Abbey around.

“We have exceeded our targets we set for 2005. We’ve made excellent progress in reducing costs across the business, and there are early but clear signs of sustainable revenue growth.

“We have set ourselves clear targets, and we will build on the momentum we have established in 2005 and expect further improvements in customer service and business efficiency in 2006.

“We’ve made a good start towards achieving our three-year turnaround and long-term goal of becoming the best retail bank in the UK.”