Banks make record profits as customer battle debt

Sunday Mirror, 7 January 2007

Exclusive by Stephen Hayward, Consumer Correspondent

HIGH street banks are set to declare record profits of more than £40BILLION A YEAR - while their hard-up customers plunge deeper into debt.

The astonishing profits - which work out at £112million a day - are up from £34billion the year before.

They come at the expense of customers who pay £5billion a year in overdraft fees and £3billion for controversial payment protection insurance on loans, credit cards and mortgage repayments.

Last night anti-debt campaigners accused the banks of growing rich on the back of spiralling personal debt, which now stands at a record £1.3trillion.

The biggest single winner is HSBC, Britain's biggest bank, which made £13billion last year, up from £11.5billion in 2005.

Halifax Bank of Scotland, accused of ruining Christmas for Farepak customers after failing to increase its owners' overdraft last October, has racked up £5.5billion profits, up from £4.8billion.


The figures are due to be announced over the next two months. They come as millions face bigger home loan bills because of rising mortgage rates.


There has also been a surge in repossessions and personal insolvencies - expected to top 100,000 a year for the first time.


Critics say high street banks have pushed up overdraft charges -which the Office of Fair Trading is investigating - while offering paltry interest rates on accounts.


Further profits have come from financing lucrative takeover deals, switching customers online and closing local branches.


Niall Cooper of the Debt On Our Doorstep pressure group said: "If interest rates go up it is quite feasible the debt bubble will burst."


Stuart Bernau, boss of Nationwide, Britain's biggest building society, said: "It's natural that customers will question whether they are getting good value and service from their banks."


Pula Houghton, senior policy advisor at consumer group Which?, said: "People are being penalised for the smallest transgression."


Britons owe a third of unsecured debt in Western Europe, typically £3,000 in debt - double that of their continental cousins.



WHO'S RAKING IT IN
HSBC £13bn
RBOS/NatWest £9.2bn
Barclays £7bn
Halifax Bank of Scotland £5.5bn
Lloyds TSB £3.7bn
Abbey £940m
Northern Rock £610m
Alliance & Leicester £553m
Bradford and Bingley £333m


HOW THEY HIT YOU
INTEREST rates up to 18.3% on overdrafts - 29.8 per cent on unauthorised ones.
£25 CHARGE for bouncing cheque.
A 5% RISE to 16% on credit card rates.
MONTHLY fees on credit cards.
3% INTEREST on balance transfers.
A £3 CHARGE on credit card cash withdrawals.