A turnaround is under way at Abbey National with revenues stabilised and profits holding firm, the bank's new Spanish owner said.
Santander Central Hispano yesterday stuck by the view that it would take three years to "fix" the business, but said it was encouraged by the positive progress made since its £9.5 billion takeover of Abbey last November.
About 3,000 jobs have been axed and Abbey said £101 million of costs have already been eliminated.
That puts it ahead of its original plan and on course to beat its revised target of £150 million of savings this year.
It expects to take out a further 1,000 positions by the end of December after upping its target for job cuts at the time of its first-quarter results in May.
Abbey said it was rebuilding its position in mortgages and had a 9.2 per cent share of the market for gross lending in the first half compared with 8.2 per cent over the final six months of 2004.
In its core banking business, Abbey said sales of bank accounts, credit cards, unsecured loans and investment products were all higher than a year ago.
Pre- tax profits offit sof £ 294 million for the six months to 30 June virtually matched its performance at the same stage of 2004. The figure included the impact of £91 million of reorganisation costs and other charges.
Chief executive Francisco Gomez-Roldan said: "Eight months on from the acquisition, we are firmly on track. We have made excellent progress on costs and a good start on revenues.
"But this is only the start. Turning Abbey around will take three years and there are still many things to fix."
Challenges facing the bank include improving service levels and reducing staff turnover, while ensuring that it can profitably replace existing business.
Santander has already focused on training bank staff to sell a wider range of products and the number of authorised Abbey employees in branches has risen by 14 per cent.
Arturo De Frias Marques, an analyst at Dresdner Kleinwort Wasserstein, said there were "clear signs of a turnaround" at Abbey.
Net lending between April and June was positive for the first time in three quarters, while he said net profits of £207 million were 12 per cent better than his forecasts.