BRITAIN'S biggest mortgage bank, the Halifax, has revealed an eight per cent rise in pre-tax profits, despite severe losses experienced at its Internet banking arm.
The former building society, turned bank, posted full year profits of £1.89bn, before one-off items, in the year to the end of December. One-off items included start-up costs associated with the launch of Intelligent Finance, its stand-alone Internet bank, as well as £44m of rationalisation costs.
Intelligent Finance turned in a loss of £88m, since its delayed launch at the end of August.
The bank, which offers a stand-alone Internet and phone banking service, had more than 80,000 account applications as at the end of December, said Halifax. It had £600m of approved, but not yet completed, lending on its books.
It was dogged by teething difficulties and was forced to delay the launch, due last July, because of fears that computers could not cope.
Underlying pre-tax profits for the year came in at £1.72bn, compared with £1.61bn at the same point last year.
Lending reached a record £21bn, up £2.8bn, with residential lending of £4.1bn, giving a market share of 10.3 per cent.
Halifax's balance of savings increased to £80.6bn, giving the bank a 13 per cent share of that market, while its share of the market for individual savings accounts reached 35 per cent.
current account sales tripled during the year, compared with the previous year, fuelled by the launch of a current account with a four per cent interest rate in October.
Earlier this month, Halifax rode to the rescue of troubled mutual Equitable Life with a £1bn takeover of its assets. This meant its funds under management increased to £67bn.
As a mortgage price war moved a step closer, the bank said it was launching a new variable mortgage rate.
The move follows the decision on Monday by the Nationwide building society to slash its base mortgage rate for new and existing customers. Halifax said it would move to charging daily interest on mortgages from next month for new customers and introduce a low-cost "Halifax Variable Rate".
This will mean its base mortgage rate drops from 7.5 per cent to 6.75 per cent, saving homeowners with a £60,000 interest-only mortgage about £450 a year.
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