Abbey aims to change habits

Counters are no longer needed to withdraw or deposit cash

The UK bank, Abbey National, has reported a sharp rise in profits despite increased investment in its internet operations.

It said it had spent £96m transforming the bank, including £39m on internet banking, as it unveiled a 5% rise in half-year profits.

The investment total included the £8 m cost of launching its retail e-banking initiatives and the £31m cost of launching its internet bank Cahoot.

Since the May launch of online banking for existing customers, 365,000 had registered, more than double Abbey's target

Meanwhile Cahoot, which had a high profile and troubled launch early last month, had 31,000 accounts.

Counters down

That was half the number of people who had applied to join.

Abbey National has been attempting to persuade customers not to use its branches and counter services for "low value transactions" - the sort which was central to its operations in its former guise as a building society.

These efforts have partially succeeded with counter transactions now 15% of the total, compared to 18% in 1999 and 24% in 1997.

For the first six months of 2000 it said pre-tax profits were £922m from £875m in the same period in 1999.

The results came in above the range expected by City analysts.

Among future plans, Abbey National said it expected to launch a new investment management service called Prosper in the Autumn.

The service will be aimed at customers with more than £50,000 in liquid assets.

A management restructuring announced in May would generate ongoing savings of £16m per year from 2001.

It has also launched a pilot scheme to explore the potential for franchising the branch network to drive up revenues.