Blackfriar: Halifax is getting back to doing what it does best

A decade after the start of the banking crisis, Lloyds and its Halifax brand have undergone a transformation.
Halfax Scooby Doo adHalfax Scooby Doo ad
Halfax Scooby Doo ad

At a time when rival bank HSBC is suffering from Brump (Brexit and the election of American President Donald Trump), Lloyds and Halifax’s focus on UK customers has placed the banks in a very good position.

Lloyds said annual profits in 2016 more than doubled to £4.24bn, its highest level in 10 years, boosted by a strong performance from its Halifax Bank division.

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The bank said that Halifax was a key contributor to group profits.

Under ​managing ​d​irector​ ​​​Russell Galley​ (and his predecessor David Nicholson), Halifax has been allowed to return to what it was always best at - challenging the big banks with its quirky humour and steadfast focus on saving customers money.

Back in June, Mr Galley said one of his biggest challenges was to reinvigorate the Halifax brand and help it to “get its mojo back”.

“It’s a very down to earth brand. But with the advertising we had become very similar to other banks,” he said.

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Under Mr Galley, the Halifax has launched TV advertising campaigns featuring much-loved kids cartoon characters such as The Flintstones, Scooby Doo and Top Cat.

The successful Top Cat ad campaign meant that Halifax was the only bank to feature in Adwatch’s most memorable ads of 2016​.

Meanwhile the high profile Halifax Savers Prize Draw ​is continuing to attract customers and there have been more than 65,000 winners since the first ever draw in 2011, with the total prize money in the past five years topping £40​m​.

This is a simple and easy way for customers to earn interest - a sort of half way house between doing the National Lottery and investing in Premium Bonds.

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The odds of winning are much better than playing the lottery and customers do get paid interest, unlike Premium Bonds which don’t pay any. Instead their Bonds enter a monthly prize draw for a chance to win tax-free prizes.

Halifax said the Savers Prize Draw rewards more than​ ​1,100 Halifax savings customers e​ach​ month.

It is also seeing strong demand from customers who are disgruntled with their bank and attracted over 200,000 current account switchers in 2016​.

Halifax lost its way when it was first bought by Lloyds in a Government bail out at the height of the financial crisis, but it has well and truly found its feet now.

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Meanwhile parent company Lloyds Banking Group is moving on from mis-selling scandals and its Government bailout at the height of the financial crisis. The Government is expected to sell off the last of its stake this summer.

Lloyds’ ​2016 ​profit​ was the biggest since 2006 and comes as it puts the PPI saga and taxpayer bailout behind it.

Richard Hunter, head of research at Wilson King Investment Management, said: “Under the careful stewardship of Antonio Horta-Osorio, Lloyds has transformed into something of a modern day success story in the aftermath of the financial crisis.”

However Lloyds did sound a note of caution about the future, saying its performance ​i​s “inextricably linked to the health of the UK economy”, which faces an uncertain outlook amid Brexit negotiations.

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“Naturally, challenges will follow as the UK consumer is showing some early signs of retrenchment, which makes the rise in the impairment number a little more troubling,” said Mr Hunter.

Historically low interest rates will also continue to provide a difficult backdrop for banks in general, whilst the cost or regulation – let alone any further fines darkening the picture – will be a necessary cost of doing business.

“Even so, the overall picture is one of robust recovery for Lloyds,” said Mr Hunter.

10 years is a long time to wait, but it looks like both Halifax and its parent Lloyds have finally got their mojo back.