London Scottish bucks the trend

LONDON SCOTTISH Bank, the credit and debt-collecting group, bucked the trend in banking last year with a 23 per cent increase in pre-tax profits to pounds 3.8m.

Jack Livingstone, the chairman, was gloomy about the effect of the recession on future borrowing growth in the credit business but highlighted the good prospects of the debt-collecting side.

On lending, he said: 'I don't think there will be a recovery. People have applied their own self- discipline on borrowing. A new sanity has emerged.'

He added: 'People are borrowing a lot less than we are prepared to lend them. I have been in this business 37 years and it has never happened before.'

London Scottish specialises in small loans to customers who cannot normally borrow from banks and building societies. One of its successful lines is a Christmas club operation in which customers put aside a small amount each week towards a festive hamper.

The consumer business made a profit of pounds 1.5m compared with pounds 1.1m in 1991, but the growth was because of lower finance costs and better control of overheads.

Profits from debt collection rose 52 per cent to pounds 1m, with some of the growth from acquisition. Mr Livingstone said the improvement reflected the development work put into the debt-collection business and the static credit business, which allowed resources to be switched over.

Reinsurance business, based on insuring debtors against unemployment and sickness, made pounds 1.3m, slightly down on 1991.

Mr Livingstone said business in the first eight weeks was slightly ahead of last year and bad debts were stabilising but the climate remained difficult.

Bad debts rose slightly last year from pounds 2.1m to pounds 2.3m, reflecting the continuing effect on customers of loss of overtime, short-time working and unemployment. The business centres on council estates and poorer districts.

The shares rose 4p to 67p.