British bank Abbey National slumped today to a £144 million (€204.2 million)half-year loss and cut its dividend as its troubled wholesale banking arm continued to ravage the bottom line.
Britain's second-biggest mortgage lending bank, which made a profit of £412 million a year earlier, is in the midst of a three-year strategic overhaul after a disastrous foray into investment and wholesale banking.
It is selling all businesses outside personal banking. Though some bank analysts had even expected Abbey to break even for the six months ended June 30th, losses on wholesale loansand on investment banking pushed the group into a heavy loss.
As expected, Abbey cut its interim dividend to 8.33 pence, consistent with its new dividend base of 25 pence for the year.
Abbey's personal financial services (PFS) unit - at the centre of its new strategy - made money, though profits there fell to £588 million from £663 million.
"The transformation of the PFS business requires a fundamental root and branch change, and a substantial amount of progress has been achieved in just 150 days," the bank said.
"The tangible improvements we are making will be visible in 2004." The value of assets held in Abbey's Portfolio Business Unit - the former wholesale banking business - fell 57 per centthrough the first half to 25.7 million pounds, reflecting a series of disposals.