This fall in profit was caused by costs incurred in the first half of fiscal 2006, when Bradford & Bingley had to set aside GBP89.4 million to cover the estimated outlay of compensation for mis-sold endowment and investment products.
Despite this setback, the bank commented that gross new residential lending reached a new record, up 43% over 2005 to GBP10.3 billion. In addition, while residential lending balances were up 19% to 31.1 billion, Bradford & Bingley reported that saving balances were up 11% to GBP19.7 billion.
Bradford & Bingley also revealed that the group’s total assets increased by 11% year-on-year to GBP45.5 billion, while its underlying cost to income ratio improved to 44.4% over the 45.6% recorded in 2005, indicating good efficiency.
In addition, the group revealed that it had signed a forward sale deal with GMAC in December 2006, which would allow it to acquire between GBP1.4 billion and GBP4 billion of mortgages in each of the next three years.
Steven Crawshaw, group chief executive, commented: Bradford & Bingley has had a very good year, with best-ever lending volumes, stable credit quality, strong savings performance, and good profit growth. We had a record year-end pipeline and, based on trading so far, expect to continue our strong performance in 2007.
Bradford & Bingley commented that it believes house prices will continue to rise in 2007, although at a slower pace than in 2006, and that gross mortgage lending would be 5% to 7% above 2006 levels. According to The Guardian, however, analysts have been cautious about the prospects for the buy-to-let market, a segment that the group relies on, as immigration slows down.
