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Santander's Abbey profit up as bad debts dip

Source: Reuters - Thu 30th Jul 2009

The British arm of Spanish bank Santander said profits rose by a third in the first half of the year as bad debts showed a second consecutive quarterly decline.

Santander said provisions in its UK business were 176 million pounds in the second quarter, up from 92 million pounds a year ago but down from 189 million in the first quarter of this year. The first-half provision of 365 million pounds doubled from a year ago.

Britain's banks are expected to report a jump in bad debts when they report next week, and investors are watching for clues on whether those losses are still rising rise or whether the pace of increase is slowing.

Profits for Santander in Britain, which includes Abbey, Alliance & Leicester and Bradford & Bingley, were 790 million pounds in the six months to the end of June, helping the bank's Spanish parent to a net profit of 4.5 billion euros, down 5 percent on the year but ahead of forecasts.

Santander UK said it grabbed mortgage and savings business from troubled rivals.

UK gross mortgage lending was 10.8 billion pounds in the first half, or a 16 percent share of the market. It is Britain's second biggest home loans provider with a traditional 13 percent share.

The number of residential mortgages three months or more in arrears rose to 1.34 percent at the end of June from 1.13 percent at the end of March, but the lender said the number of repossessed properties had fallen by 106 during the quarter to 942.

The Spanish bank said it was on track to rebrand Abbey and B&B as Santander early next year and A&L later in 2010.

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