RBS steps back from the intermediary market

Royal Bank of Scotland has released its interim results for the first half of 2006 which shows the bank has had reduced business in the intermediary market.

In its interim report RBS, says: Intermediaries are an important distributing channel for mortgage products in the UK and we are an active participant in this channel, although there can be significant swings in volumes based on competitive pricing.

In the first half of 2006 we stepped back from this market since, at the prevailing pricing, we considered the risk-reward equation unattractive relative to other opportunities.

The results also showed that average mortgage balances grew by 10% over the comparable period last year which is partly as a result of strong growth from First Active UK during 2005.

It says it focused primarily on its branch channels and its offset mortgage product again performed strongly and also revealed that mortgage arrears remain very low and small business credit quality remains stable.

The average loans and advances rose by 17%, and the bank says this reflects higher mortgage balances at First Active UK and The One account in the first half, despite reduced volumes in the intermediary mortgage channel and a reduction in average unsecured loan balances.

Furthermore, its net interest margin narrowed principally because of the increased proportion of low risk mortgage lending in our business mix.