Half-year profits at A&L almost wiped out
by Kay Murchie
UK mortgage lender, Alliance & Leicester (A&L), has announced that half-year profits have nearly been wiped out after taking a £209 million hit on risky assets and higher funding costs.
Pre-tax profits for the first half of 2008 plummeted to £2 million, compared with £290 million in the same period of 2007.
The worldwide credit crisis was responsible for the write-downs said A&L but added that it was well capitalised and its core business was strong.
The former building society added that the quality of its mortgage and unsecured personal loan books remained strong with only a marginal increase in the number of accounts in arrears.
However, A&L hasn’t had to call on its shareholders to shore up its balance sheet like other banks.
However, like many other lenders, A&L has been hit by a slowing housing market after it revealed net home loan lending is down 44% compared with last year.
This week, other banks to reveal significant falls in profits include Lloyds TSB and HBOS who have both been hit by rising levels of bad debt.
Last month, Spanish bank Santander agreed a deal to buy A&L in a deal worth £1.3 billion.
The Spanish bank is offering 317p per A&L share. The deal is expected to be finalised late autumn.
A&L has a workforce of around 8,000 and is based in Leicester.
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