Abbey provides some relief to the UK banking sector
UK financial giant Abbey, now owned by Santander, has revealed a set of figures today which have given investors in the financial industry a much-needed boost. While the 25% increase in profits to £372 million was in itself a reason to celebrate, it was the significant reduction in bad debt provisions which caught the eye of many analysts.
The company announced a fall in bad debt provisions from £234 million to £189 million amid hopes that the UK mortgage sector could be over the worst. The company has also suggested that a number of customers who were in financial trouble have been able to refinance those debts at lower interest levels and reduce the pressure in the short to medium term. As you might expect, the upbeat thread in the profits and accompanying announcement saw the likes of Royal Bank of Scotland and Lloyds Bank shares rise substantially from relatively low levels.
While Santander has forecast that UK property prices will fall by between 8% and 10% this year, with unemployment set to rise above 3 million, there are signs of confidence re-emerging in an industry which has been in the doldrums for some time.
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