B&B writes down £507m on mortgage debt
by Gill Montia
Story link: B&B writes down £507m on mortgage debt
The nationalised element of buy-to-let lender, Bradford & Bingley (B&B), has written down £507.7 million in mortgage debt in its 2008 accounts.
The hit, which compares with a provision of £22.5 million for 2007, is based on estimated arrears at the end of last year and the impact of further house-price falls in the months ahead.
The lender also reported that the total number of loans three months or more in arrears or in possession equates to 4.60% of its £41 billion mortgage book.
The figure compares with 2.48% in the six months to the end of June 2008, while the total value of arrears stood at 0.27% of mortgage balances at the end of last year, compared with 0.16% in the first half.
Actual losses on properties sold following repossession totalled £65.5 million in 2008, up from £23.8 million in 2007.
B&B was taken into public ownership in September of last year in a move which also effected the sale of its deposits business and branch network to Abbey, for £612 million.
The lending side of the business is now in the process of being wound down, although it still provides transitional services to Abbey to support the transferred deposits business.
The business therefore actually made a pre-tax profit of £134.3 million for 2008, which takes into account a gain of £216.3 million from the sale.
It also reflects certain benefits relating to the replacement of retail deposits with Government debt, under the terms of its rescue.
B&B says it expects the prevailing economic environment to result in a further deterioration in the arrears during 2009.