The ratings on Abbey National PLC continue to be supported by its strong U.K. market position, continuing good group profitability, good efficiency, strong liquidity, and effective distribution networks. Core capitalization is under some pressure, however, and competition is more aggressive in key markets. Abbey National therefore continues to make good progress with its diversification into nontraditional activities (these contributed about 55% of group pretax profit in the first half of 2001). These provide some protection against tighter margins in traditional markets, but some of the new businesses are potentially more volatile than traditional activities. Although the group's objective is a lean capital base, Standard&Poor's expects each part of the group to be capitalized to appropriate levels given its
