Abbey still deep in the red

Banking group Abbey National remained deep in the red today after taking a string of one-off charges as part of its three-year revival plan.

The group reported wider than expected bottom-line losses of ?686m for the year to 31 December - still an improvement on the ?947m seen in 2002.

Despite the heavy losses, the company's chief executive Luqman Arnold said the turnaround strategy launched by last year remained on track with a "substantial recovery" in results expected this financial year.

A large chunk of today's losses were blamed on non-trading charges incurred from the disposal of non-core assets, mainly in the corporate sector.

Those businesses are being off-loaded as part of an overhaul that will enable Abbey to concentrate on its recently rebranded personal finance business. That division reported profits of ?1.02bn, against ?1.22bn last time.

Mr Arnold said it had been a tough year for the group but that progress had been made, particularly in reducing risk levels.

"Given the upheaval the business has had to cope with, the trading results reported today are resilient and encouraging for the future," he said.

The restructuring has also seen Abbey achieve ?165m of annual cost savings in its high street arm, made in part through the closure of six UK sites and the transfer of some administrative activities to India.

Abbey's strategy is to focus its operations around five key UK locations in Belfast, Bradford, Glasgow, Milton Keynes and Sheffield.

The process is still ongoing, but other changes have included the rebranding of the UK's second biggest mortgage lender as Abbey and a drive to rid its products of financial jargon.

Around 400 customer advisers have been recruited, while the group has increased its focus on training and service standards.

Abbey said it had attracted a 10.7% share of the mortgage lending market with volumes in the second half of the year up 26% on the first half. The number of bank account openings fell to 396,000, compared with 444,000 a year earlier.

Abbey National shares fell as much as 14% following today's announcement.