Greg Wood: "It seems as if the Halifax has more money than it knows what to do with"

Each of its three and a half million shareholders is to receive 62p per share, as part of a £1.5bn windfall package.

As the average shareholding is 350 shares, it means the average payout will be £217.

The news was revealed in Halifax's annual results which showed underlying pre tax profits up 7% to £1.8bn.

However one off costs in preparing for the millenium bug, and pensions provisions reduced the increase to 3.4%.

Mortgage lending is at record levels, up 18% at £14bn, and the bank has taken 12% of all new savings accounts in the UK.

Van hire

The company said each Halifax shareholder would receive the 62p per share cash payment as part of a corporate restructuring, under which shares in Halifax Plc will be exchanged for shares in a new holding company.

The Halifax oils the purse strings

Chief executive James Crosby said: "These results confirm Halifax's position as the market leader in its core markets whilst underlining the exceptional progress we are making in our new businesses."

In December last year Halifax agreed to buy the Birmingham Midshires building society.

Subject to regulatory approval, the bank expects the deal to be completed by April.

It has also completed the purchase of a 50% shareholding in Lex Vehicle Leasing, one of the UK's largest car and van contract hire companies.

Halifax goes French

Last month it also proposed a 50/50 joint venture with Paris-based Cetelem SA, a major player in the European consumer credit market.

Jonty Bloom: "Since becoming a bank, the Halifax have never looked back"

A new company, called Halifax Cetelem Finance Ltd, is expected to begin trading in the autumn.

Halifax says it now has 800 bank branches, 600 estate agents, and 1,000 insurance and broking agencies across the UK.

A final dividend of 13.5p is recommended for 1998, which together with the interim dividend of 6.75p, gives a total of 20.25p.

This represents an increase of 15.7% over the 1997 full year dividend of 17.5p.

At 1130 GMT its shares were trading at 784p, up by 13p on the start of the day.