Increasing operating income and a stable cost base saw Intelligent Finance, the telenet banking subsidiary of Halifax Bank of Scotland (HBOS), turn a small profit for the first time in December. For the year as a whole the standalone unit cut losses to £53 million from £147 million in 2002.
Customer advances increased by £3.1bn in 2003 as IF took a UK net mortgage lending share of over three per cent. Customer deposits have grown by £900m including a trebling of Cash ISA balances. Operating income increased fourfold compared to 2002, while operating expenses declined reflecting improved efficiency in the maturing business.
On the insurance front, HBOS' other standalone venture esure is forecast to achieve break even in the first half of 2004 after selling almost 800,000 motor and household policies over the Web in 2003. In the fourth quarter, the bank also launched a new joint venture with Peter Wood, founder of the Direct Line insurance business. Dubbed First Alternative, the business uses the established Internet infrastructure to offer policies to higher premium drivers who fall foul of esure's strict eligibility criteria.
Across the bank as a whole, customers are continuing to migrate to lower cost distribution channels says HBOS. Internet registered users have grown by 39% to 2.2m and the number of online transactions has increased by 47% in the last twelve months.
The bank says IT integration following the merger of Halifax and Bank of Scotland is now largely complete and the process of decommissioning all legacy systems in retail remains on target.