B&B outlook eases concerns
MORTGAGE lender Bradford & Bingley said today that it expects this year's underlying profit to meet analysts' current expectations and that it was coping well with tough funding conditions.
The move will have reassured a jittery market that the bank is in a stronger position than many predicted after it sold off £4.2bn of commercial property and social housing loans last week.
That was seen as it increasing liquidity in the wake of the credit squeeze following the sub-prime lending crisis that engulfed rival bank Northern Rock.
B&B, which has a big buy-to-let mortgage book, further eased concerns by saying that it is confident about prospects for this market.
Chief executive Steven Crawshaw said: “Bradford & Bingley has been resilient and resourceful through the current market turmoil. We have successfully funded the bank in very tough conditions and completed the disposal of our non-retail loan portfolios in line with our strategic focus on retail mortgages and savings. We are now even better placed to take advantage of opportunities in our market.”
He said the pipeline of new business was at “record levels” at the half year and net new lending reflected this.
“We have continued to write good levels of new buy-to-let business and the new business pipeline at the end of October, whilst lower than June, was higher than a year ago.
“In addition, retail deposits have held up well, recovering from a dip in the middle of September to regain their upward path immediately. We are
recording regular and substantial inflows of UK retail savings deposits and expect to end the year strongly, helped by the launch of the new postal account.
“We have supplemented our own savings brand with an online partnership with Asda.”
B&B said a poll of 16 analysts showed them on average expecting the firm to make a profit before tax, hedge ineffectiveness and disposals of £356.6m this year.
On the buy-to-let market, Mr Crawshaw added: “The strong fundamentals that have underpinned the growth in this market remain. Rental levels are rising, landlords continue to add to their property portfolios and uncertainty in the housing market should drive further demand.
“Competition in the UK mortgage market has decreased in recent months as wholesale-only funded lenders have reduced new lending or closed to new
business. This reduction in capacity has helped to rebalance supply and demand in a way that favours well capitalised lenders with a broader funding base, such as Bradford & Bingley.
“Our positive response to the recent difficult market conditions has provided us with a secure balance sheet which positions us well to take advantage of profitable opportunities in our market,” he added.
