Bradford & Bingley reports sharp fall in profits

| February 14, 2008 | 0 Comments

Buy-to-let specialist, Bradford & Bingley, said it lost £94 million last year on specialist investment vehicles and collateralised debt obligations linked to the US sub-prime mortgage market.

Pre-tax profit almost halved to £126 million last year compared to £246.7 million the previous year. Following the news, shares in the lender dived almost 16%.

Banks across the world have been posting huge losses relating to the sub-prime mortgage market.

The lender also said the value of other assets fell £132 million in the credit squeeze. However, B&B said underlying pre-tax profits for 2007 were £351.6 million, up nearly 5% on the £335.9 million the previous year. Analysts predicted profits of £347.3 million.

Steven Crawshaw, chief executive, said these results demonstrate the strength of our underlying business. With considerable funding in place and our savings business continuing to attract new money, we are confident of our ability to continue to be a leading player in the specialist lending market.

Mr Crawshaw warned the housing slowdown was making life difficult but said the buy-to-let market was holding up well.

Recently, B&B has been the subject of rumours that it might suffer similar problems to Northern Rock because of its high reliance on wholesale funding.

Savings rose 7% to £21 billion last year while its mortgage book grew 27% to £39.4 billion. It also secured an extra £2 billion of funding from its banks, which it said would finance it until 2009.

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