Yesterday, the Abbey bank announced that its pre-tax profits have increased by 25 per cent in the first quarter of this year, despite its bad debts doubling to almost £190 million. The Spanish-owned bank stated it had ridden out the economic storm.
The Abbey posted a surplus of £372 million and added that the acquisition of Bradford & Bingley and Alliance & Leicester last year had contributed to the profits.
Abbey is now the second largest mortgage lender in the UK and the third largest player in the savings market.
These figures came amongst an otherwise gloomy outlook at the banking sector when contrasted against the largest loss in UK corporate history reported by the Royal Bank of Scotland last year and Lloyds Banking Group with its £10 billion loss. Clydesdale also reported a drop in profits by approximately two thirds to £70 million in the first quarter of 2009.
Abbey claims its success is due to a conservative lending policy during the credit crunch and finding 75 per cent of its mortgages and loans with savings deposits and managed to achieve £800 million in new mortgage loans in the first three months of this year, with an average loan to value of just 52 per cent.