Intelligent Finance, the standalone direct banking operation of UK financial servics group HBOS, says it remains on track for break even in 2003, despite reporting widening first half losses of £88 million, against £72 million a year ago.
After 18 months of trading, Intelligent Finance rates itself the largest and fastest growing UK direct bank in balance terms, with customer advances of £9bn and deposits of almost £3bn. IF currently claims 500,000 current accounts, a figure which compares favourably to rival outfits Cahoot and Smile, but is well down on the 2.3 million customers of market leader Egg.
In the six months to end June, IF opened 40,000 new current accounts and increased its total share of UK net mortgage lending to 10.4%, up from 9.2% in the full year 2001. Average number of products per customer also rose to 2.1 compared to 1.9 in the full year 2001.
Customer advances grew by £3.8bn (the formal offer pipeline now stands at £1.1bn) and savings and banking balances increased by £732m.
The growth in balance sheet contributed to a £6m increase in operating losses compared to the previous six months and a £13m increase in operating expenses against the second half of last year. IF promises that future growth in interest income and improvements in operating efficiency will ensure that this half-year marks the peak of operating losses.
In a statement, the company says: "We remain confident in our ability to meet the commitment to breakeven by the end of 2003, three years after launch."
Parent group HBOS says it remains on track to deliver against all published targets for 2002. Within retail banking, the group opened 600,000 new accounts in the first half, bettering the strong sales reported in H1 2001. HBOS, which recently launched a new automated account transfer service to help customers move banks, puts its share of growing new and switchers market at 25%. Credit balances in bank accounts have grown by 22% in the first half of 2002 whilst debit balances have grown by 12%.
The bank reports continued success in migrating customers to lower cost distribution channels, with telephone and internet sales growing by 182% and overall registered users growing by 114%.