Britain's Abbey National slumped to a wider than expected second straight annual loss after taking a hit from the sale of risky assets to return to its consumer banking roots, hammering its shares.
Britain's second-biggest mortgage lender posted a 2003 pre-tax loss of £686m sterling - far bigger than the £143m the market had expected. A year earlier Abbey had a restated £947m loss.
Abbey shares tumbled 13% in London on the news. Over the past six months the stock has been the third-worst performer of the UK's 11 listed banks.
Chief Executive Luqman Arnold is trying to revive the core personal financial services unit, neglected as previous management expanded into corporate lending. He is selling corporate banking assets, like junk bonds and private equity stakes, after they tipped Abbey to its first loss last year.
'The loss was largely a measure of selling assets and businesses that did not fit the PFS strategy. This is positive news as it substantially reduces risk,' CEO Arnold said.
Abbey cut assets at its portfolio business unit, which houses unwanted loans and businesses, by 80% to £12.3 billion. Trading profit at the personal financial services unit fell 16% to £1.02 billion.
The bank maintained the full-year dividend at 25 pence. The bank said it took a £373m insurance charge mainly to meet new UK solvency requirements. Net mortgage lending rose 40% to £9.4 billion, giving the bank a 9.9% market share, its biggest for nine years.
Arnold, who joined in 2002, has renamed the bank 'Abbey' and is revamping branches and hiring sales staff in an attempt to revive the ailing retail network. He is taking the bank back to consumer banking amid slowing personal borrowing and fierce competition from rivals such as HBOS.
