Marks and Spencer 1998 Annual Report Download - page 19

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Financial services
FINANCIAL SERVICES IS ONE OF THE FASTEST GROWING AREAS OF MARKS & SPENCER,
CONTRIBUTING 8 PER CENT OF TOTAL GROUP PROFITS.
Financial services continues to be a
profitable, high-growth area for M arks &
Spencer. O perating profit rose by 18.1% to
£89.4m during the year, so representing
more than 8% of total Group operating
profit. We extended facilities, expanded our
staffing and information technology
resources, signed up more than 560,000
Account Card holders and made good
progress across personal lending, unit
trusts, PEPs, personal pensions and life
assurance.
POSITIONED FOR SUCCESS IN A
DEVELOPING INDUSTRY
Financial services in the UK are changing as
more high street names enter the market
and customers demand more transparent
products. Though competition is
intensifying, opportunities are multiplying
and M& SFS – with its strong name, high
quality products and excellent service – is
well positioned to succeed. What is more,
we are well placed to serve the new
markets being created by the Government’s
introduction of Individual Savings Accounts
(ISAs) and stakeholder pensions.
During the year we completed the
expansion of our head office in Chester.
Staff numbers grew by 7% to more than
1,200. M ajor investment in information
technology systems will help us boost
customer service through speedier access to
information and better call handling. Such
system support – coupled with constant
focus on staff training – gives M& SFS a
vital advantage in this largely telephone-
and mail-based industry.
ACCOUNT CARD GROWTH
Net sales on the Account Card reached
nearly £2 billion during the year. We
opened our five millionth account, making
this the UK’s most widely held store card,
and giving us a current relationship with
more than one in four of UK households.
Although the financial services field remains
highly competitive, there are exciting
further opportunities for us to pursue.
STRONG PERSONAL LENDING
PERFORMANCE
New advances rose by 23% to total
£747 million. M & SFS has now lent more
than £3 billion since it entered the personal
loan market 10 years ago. O ur Personal
Reserve product, which gives borrowers a
revolving credit facility, proved extremely
popular in its first full year. We plan to
extend the scheme to non-Account Card
customers next year.
UNIT TRUSTS AND PEPS
We are recognised as one of the lowest-
charging providers of unit trusts and PEPs
at a time when customers are seeking ever
better value for money. Unit trust sales of
£201 million, together with strong market
growth, led to our total funds under
management rising by 65% to £850m.
Investment performance of our unit trusts
remained strong, in both absolute and
relative terms.
PENSIONS & LIFE
Our pension products, also known to be
some of the best value products on the
market, gained even greater flexibility
through their ability to accept transfers
from other schemes. Life assurance
continues to make steady progress. In early
1998 M & SFS was voted Best Direct
Pension Provider by “ Your M oney Direct”
magazine.
MA RKS A ND SPENCER p.l.c. 17