Profits plunge for homes loans giant

Huddersfield Daily Examiner (Huddersfield, England), Feb 13, 2008

Byline: By HENRYK ZIENTEK Business Reporter

MORTGAGE lender Bradford & Bingley today revealed a near-halving of its profits last year after an "eventful and difficult" period for banks.

A host of write-downs, including pounds 142.1m on investments hit by the credit crunch, left pre-tax profits 49% down at pounds 126m in 2007.

The Bradford-based lender said that bad debt charges on its residential mortgages had trebled to pounds 22.5m as borrowers faced more pressure.

Despite the profits blow, the lender said key markets remained healthy - with the buy-to-let mortgages sector buoyed by tenant demand at its strongest level for five years.

The group said it had largely weathered the storm in global credit markets during the second half of 2007 through a wider range of funding sources, as well as moves to sell pounds 4bn of loans in November last year to boost cash reserves. It was also focusing on lower risk lending.

B&B's position contrasts with the crisis at Northern Rock, which relied heavily on money markets to raise cash for lending and was hit by soaring borrowing costs.

B&B said savers' deposits rose by 7% to pounds 21bn last year as mortgage lending rose by 27% to pounds 39.4m.

It said margins had dipped slightly to reflect higher funding costs "given the more constrained environment".

It also raised the cost of its mortgages in the second half of last year.

CAPTION(S):

CREDIT: B&B said markets were healthy