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BRITANNIA BUILDING SOCIETY CREDIT TREND CHANGED TO 'STABLE' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Sept. 30 -- Britannia Building Society's 'A' senior debt and 'F-1' commercial paper are affirmed by Fitch. The credit trend is changed to stable from declining. The action reflects better loan quality, continued stable retail funding, and an improved operating environment.
 After continued deterioration last year, loan quality has improved in 1993. Better collections and greater attention to credit monitoring has brought down loan arrears and the number of possessions. Like many societies, Britannia receives a significant portion of expected payments on its nonperforming residential portfolio. Restating nonperformers to reflect these payments, Fitch concluded residential mortgages represented 3.38 percent of related loans as of June 30, 1993, compared to the reported figure of 10.22 percent.
 Despite greater competition for retail deposits from alternative investments, Britannia recorded a net inflow in excess of 100 million pounds sterling during the first half of 1993. Britannia has achieved solid inflows from postal accounts and has expanded alternative investment vehicles through the branch network. In addition, its wholly owned insurance subsidiary, Britannia Life, is expected to become a more important contributor to the Britannia Group's retail funding. Britannia Life announced this month that it will acquire the Life Association of Scotland, raising funds under management by about 1 billion pounds to 2.5 billion pounds.
 Britannia is benefiting from an improved operating environment in the United Kingdom. Residential property prices have increased between 1.9 percent and 3.6 percent in the first six months of 1993 according to the major U.K. house price indices. While the unemployment rate remains at a rather high 10.4 percent, the number of unemployed persons fell about 3 percent in the first 8 months of 1993. As a result, collection prospects on nonperforming mortgage loans are likely to improve.
 Despite the positive effect of lower arrears on operating earnings, substantial provisions (43 percent of operating profits) and margin pressures have limited earnings growth. Net income in 1993s first half fell to 0.40 percent of average earning assets from 0.47 percent in fiscal 1992. Margins have been suppressed by foregone interest on problem loans as well as fewer opportunities to lower deposit rates more quickly than lending rates. However, the future earnings outlook is brightened by the expectation of greater contributions from Britannia Life and lower provisions.
 -0- 9/30/93
 /CONTACT: Ricardo J. Kleinbaum, 212-908-0525, or Marc R. Pinto, 212-908-0618, both of Fitch/


CO: Britannia Building Society ST: IN: SU: RTG

PS -- NY026 -- 7176 09/30/93 10:04 EDT
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Publication:PR Newswire
Date:Sep 30, 1993
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