Scottish Widows bad debts rise
Filed under: Debt, Financial Crisis, Mortgages, Banking
Internet and telephone based mortgage and deposits bank Scottish Widows today announced pre-tax profits of £38.2m for the year, up 14% on last year. Total customer deposits were up £1.1bn at £3.8bn, up 40% on 2008. But its loan impairments soared 65%, or £2.4m to £6.2m. The company said this was low in industry terms and arrears figures were approximately one tenth of the industry average. But that rate of rising bad debt is scary.
Scottish Widows said its strong profits were achieved by targeting specific market segments and through its a range of fixed rate deposit accounts. But mortgages fell by £0.1bn, with balances of £6.5bn at the end of December 2009. This was a reflection of a weak mortgage market, it said.
Volatile market
Graeme Hartop, managing director, Scottish Widows Bank (pictured) said: "Our overall performance last year was strong against a background of considerable change and volatility in the market.
"Our strategy of offering consistent, long-term good value to our customers, with a balanced approach to risk, has been key in delivering these results." Scottish Widows said it cut costs by 17% and its cost income ratio reduced to 32%.
Hartop said: "The combination of a strong financial services brand and experience in our markets has proven to be the right balance to endure what was another testing year for the market.
Focus in risks
"Looking to the future, our key priority is to continue to build on the successes of last year and develop in our chosen markets, while maintaining a close focus on risks."
And focus on risks he must. The only worrying figure in these otherwise positive results is those bad mortgage debts. The rise was 65% of its previous figure. Rises at that rate are unsustainable, no matter how small your starting base.
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