Abbey 'trebles share' of UK's new mortgage market » Bill payments » 24dash.com

High street bank Abbey today said it had trebled its share of the new mortgage market in the first three months of 2008, as it dodged the credit crunch losses of its rivals.

The firm, which is owned by Spanish bank Santander, said it took a first-quarter share of 15.9%, compared with just 4.9% a year earlier. New lending more than doubled to £2.9 billion.

The bank relies on money markets for only 10% of its lending and has no exposure to sub-prime mortgages. Abbey has funded the lending through increased customer deposits and sales of its treasury investments elsewhere in the business.

Abbey said its high share of the market during the first three months of 2008 came because the bank has "little or no exposure" to the complex mortgage-backed investments hit by the crunch which are hindering its rivals.

Pre-tax profits were "well ahead" of the same period last year, the bank added.

Abbey has also improved its efficiency since being taken over by Santander in 2004. Its Spanish parent offers increased financial backing as well as access to the credit lines offered by the European Central Bank.

Rivals have reined in lending and hiked up mortgage costs as funding becomes more expensive following the credit crunch - leaving the door open for Abbey, which uses customer deposits for around 60% of its lending.

Its business model contrasts with crisis-hit Northern Rock, which relied on wholesale markets to fund the lion's share of its lending and came unstuck when borrowing costs soared last summer. Northern Rock's woes also helped Abbey by removing competition from the market.

Chief executive Antonio Horta-Osorio said: "We have made a strong start to the year despite the very difficult market conditions. Abbey is well-placed to meet the future challenges and capitalise on opportunities."

Abbey did, however, report a rise in repossessions to 625, compared with 528 last year, while borrowers more than three months in arrears rose 16% to 8,195. The company said this was expected following rises in interest rates, which peaked at 5.75% between July and December, and better than the industry average.

The bank currently has 704 branches in the UK and has recently announced plans to open a further 300 outlets.