Bradford & Bingley profits nosedive

Bradford & Bingley (B&B) has presented "disappointing" financial results for the first half of the year following a turbulent period for the bank.

The buy-to-let specialist made a statutory loss before tax of £26.7 million in the six months to June 30th, compared with a profit of £180.4 million in the same period last year.

Credit impairment charges for the six months rose to £74.6m the bank confirmed, up from £5.3m in the same period last year. The surge is largely the result of the lender being targeted by organised mortgage fraudsters, which cost the bank £18 million.

It has been a trying time for Bradford & Bingley, with the lender seeing chief executive Steven Crawshaw step down in June for health reasons, to be replaced Richard Pym, the former boss of Alliance & Leicester.

A £400 million rights issue also failed to win the confidence of investors, with only 20 per cent of the shares sold to the market. The residual shares remain with the underwriters UBS and Citigroup.

The rights issue was restructured twice following the failure of a potential deal with American investors Texas Pacific Group (TPG).

"In the light of the turbulence in the banking and housing sectors, the first six months of this year have been very challenging for B&B," explained chairman, Rod Kent.

"Although we clearly signalled this at our announcement on 2nd June, the results for the half year are, of course, disappointing," he added.

Arrears levels on the Bradford & Bingley mortgage book have continue to rise over the period, in line with the majority of the market. The company also points out, however, arrears on organic loans considerably lower than arrears on acquired loans.

"As a focused business within a sector that is currently going through a cyclical downturn, Bradford & Bingley has experienced a particularly challenging first half," B&B said announcing the results.

"We have witnessed unprecedented financial dislocation, with wholesale medium-term funding markets being difficult to access since last summer."

Over the remainder of the year the outlook will remain "cautious", with B&B expecting arrears to increase further.

Chris O'Toole