Profit before tax for the 13.5 month period was £9.1m* compared with £4.6m for the 12 months to 15 November 2003.
Mortgages under management ended 2004 at £10.2 billion, exceeding £10 billion for the first time in the Bank’s history. Gross lending for the 13.5 months to 31 December 2004 was £4.6 billion compared with £3.7 billion for the 12 months to 15 November 2003. This was achieved despite the final quarter slowdown in the mortgage market.
The Bank has reached critical mass and is now focussed on building volume within the same infrastructure. As a result, the Bank currently operates with 18% fewer staff than when the mortgage book was half its current size in May 2000. The use of efficient telephone and internet-based processes means that the need for a costly branch network is avoided.
Mortgage business quality remains very high with the average indexed loan-to-value ratio of the mortgage book falling from 46.3% to 44.7%. Arrears (customers three or more monthly payments down) were 0.12% at 31 December, about a sixth of the industry average*. This quality of business remains one of the key reasons behind the success of the Bank’s Lothian securitisation programme, which accounts for 30% of the Bank’s funding. Lothian Mortgages (No.3) plc was oversubscribed and raised £1.25 billion on 30 June 2004. This brought the total raised through securitisation by 31 December 2004 to £3.75 billion.
More recently, Lothian Mortgages (No.4) plc raised £1.25 billion in February 2005, at a UK retail mortgage-backed securitisation record pricing of LIBOR +9.5 basis points over the lifetime of the bonds.
New business is coming not just from savings and mortgage products but from opportunities elsewhere in the group– for example, taking cash deposits as part of the Self Invested Personal Pension (SIPP) product. The opportunities for Standard Life in having a banking function at its core are now beginning to be realised.
