23rd Sep 2019 07:01
(Alliance News) - J Sainsbury PLC is set to exit mortgage lending in order to conserve capital and improve the profitability of its banking unit, the Financial Times reported Monday.
The supermarket chain had formally attempted to reduce its operating costs through a GBP12 billion merger with Walmart Inc-owned rival Asda, however the UK Competition & Markets Authority blocked the scheme in April.
According to a person with knowledge of the Sainsbury's Bank's plans, mortgage lending has been considered by the group as "very capital intensive, and its a big amount of capital for a small amount of customers", the newspaper reported.
At an investor meet this week in Southampton, England, the grocer is expected to announce its revised strategy, which may include refocusing its bank on providing less capital-intensive services, such as insurance and credit cards.
By focusing on customers of Sainsbury's and subsidiary Argos, the group expects to reduce the commission it pay to entities such as price comparison website for introducing new business.
The FT reported that Sainsbury's mortgage book stands at GBP1.47 billion, making up a about a fifth of its total lending.
https://www.ft.com/content/fc0fb336-db75-11e9-8f9b-77216ebe1f17
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