Pre Close Meeting Statement

Woolwich PLC
19 June 2000

Woolwich pre close meeting statement
prior to analyst meetings


At pre close period meetings with analysts which will commence today, the
following information will be provided:

During 2000 Woolwich has made very good progress delivering its Open Plan
strategy. This has included the introduction of the only fully operational WAP
phone banking service in the UK and Open Plan Offset which provides a
radically more efficient form of personal financial management. In both
initiatives Woolwich has been first to the market place and unique in offering
them on the high street and the telephone as well as through e-commerce
channels. Woolwich's joint ventures have also progressed well with a further
development of the Littlewoods customer base, good progress on GHL and the
Sedgwick joint venture for independent financial advice services running ahead
of our expectations. 

The cogency of our strategy has been underlined in recent months by a number
of competitor announcements of plans to introduce internet only offerings
supported by substantial advertising spend and loss-leading offers. These
announcements have created a turbulent market and Woolwich has therefore
chosen to bring forward its programme of customer acquisition supported by a
significant marketing campaign. 

The beginning of national advertising in June has resulted in an immediate
increase in applications and early indications are showing an increasingly
pleasing trend. We continue to believe that Woolwich's strategy of an
integrated service available via all channels is superior to partial delivery.
Woolwich's technical strength has been demonstrated by the speed to market of
these new services, recently highlighted by the early launch of Open Plan
Offset. 

Measures to increase customer numbers are proving effective with telephone and
internet applications having shown rapid response to the marketing programme
and Open Plan customers are now anticipated to exceed 200,000 by the end of
June. Customer acquisition is being supported by conversion programmes
designed to recruit selectively from the existing customer base in parallel
with new customer acquisition. 

During this rapid expansion initial levels of product penetration will be
reduced to some extent, although average balances have been higher than
forecast and are rising. Upselling programmes to raise product penetration
levels have been put in place with promising early results.

At the beginning of the year, we indicated that we would be prepared to spend
further on Open Plan in order to capitalise on our first mover advantage. In
the first half, expenditure on additional marketing covering television, press
and radio is anticipated to be £17m. Woolwich has also brought forward
additional fulfilment capacity to service the planned recruitment programme.
This has been provided directly and through outsourced services. These costs
are intended to support the Open Plan roll out which will achieve rapid growth
in customer numbers during the summer months with revenue generation to
follow.

The additional infrastructure costs for Open Plan announced for 2000 of £33
million are proceeding according to plan, with £11m of this anticipated to be
spent during the first half of 2000. 

Woolwich's performance in the mortgage market has been excellent with net
lending well ahead of last year's levels. Woolwich has viewed the maintenance
of its core franchise as critical in the roll out of Open Plan to customers
and has achieved these volumes while retaining asset margin as a result of
good margin management and the continued development of innovative products.
Unsecured lending including FirstPlus has continued to grow balances in spite
of increasing competition in this marketplace.

Credit quality continues to be high with flexible mortgages increasing the
attractiveness of Woolwich products to high net worth/low risk customers. It
is anticipated that this trend will be continued with the Open Plan Offset
mortgage. Provisions are expected to rise in line with volumes as secured and
unsecured lending continue to expand. 

In retail savings, having successfully addressed the outflows which had
characterised 1999, we maintained our position by issuing a number of
competitively priced fixed and variable rate offerings, while sustaining flows
in its traditional branch based accounts and attracting deposits in Open Plan
accounts.

In non-interest income  we have seen good results in the lending and retail
banking areas reflecting Woolwich's success in expanding its fundamental
franchise upon which the Open Plan proposition will continue to be grown. The
performance in Woolwich IFA income has been subdued during the first half due
in part to the effect of higher interest rates currently available on
conventional savings products. However the Sedgwick joint venture established
with Marsh McLennan at the end of last year is developing well with
improvements in productivity from the registered individuals in the joint
venture. Income from long term savings including unit trusts has continued to
grow during the period.

GHL has progressed well with the transfer of Woolwich's mortgage origination
and servicing to management by GHL now complete. During July GHL's origination
system is being installed in all service centres and the majority of existing
mortgages will be transferred on to the GHL servicing system with the
remainder to follow later in the year. Woolwich systems will continue to run
in parallel until the conversion is complete in order to ensure a fault free
transfer. 

GHL is rapidly achieving improved efficiency with the number of mortgage
completions per member of staff doubling over the equivalent period last year.
Staff levels have so far been reduced by over 25% in mortgage origination and
deeds handling while service levels have become excellent. During the year GHL
has shown the ability to cope with high volumes resulting in increased volume
from key introducers. This improvement in service has been of assistance in
achieving the strong lending performance in the year so far.