Bradford & Bingley has taken a major hit from the US sub-prime crisis, with full-year profits falling by almost 50% for 2007.
The bank’s annual reports reveal profits fell to £126m, down from £246.7m in 2006. Its share price tumbled by 10.5% to 217.75p following the announcement.
The profit loss was mainly due to significant writedowns of assets, particularly those securities tied to US mortgages, and echoes problems seen by other banks around the world.
However, the bank was positive about its underlying business prospects, which it says have suffered a setback due to the challenging business environment.
Steven Crawshaw, group chief executive, says: “These results demonstrate the strength of our underlying business, which has performed well in a challenging year for the sector. With significant 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.”
The banks says underlying profits before tax – excluding losses from ‘unusual and extreme external events’ – have increased 5% to £351.6m.
B&B says the fundamentals of its specialist lending markets remain strong and it expects the buy-to-let market to grow at a faster rate than the mainstream mortgage market.
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