A&L first-half profit falls 99%

by Gill Montia

Story link: A&L first-half profit falls 99%

Alliance & Leicester’s (A&L) half-year profit has been crushed by a £209 million writedown on the value of some of its riskier assets and a rise in funding costs.

Pre-tax earnings declined 99%, to £2 million, from £209 million in the first half of 2007.

The writedown was close to a May estimate of £192 million and the bank says it remains in good shape and that its retail and commercial banking businesses are performing well.

New current accounts grew by 154,000 in the six months to end June and customer deposits rose by £800 million, to £24.1 billion. However, net home loan lending was 44% down on 2007.

Earlier this month, Spanish bank Santander agreed to buy A&L in a deal that values the bank at around £1.26 billion.

Under the terms of the proposed acquisition, A&L shareholders will get one Santander share for every three held in A&L.

The bank says it will benefit from Santander’s proposed purchase in terms of stability and certainty in difficult economic times.

Earlier this week, HBOS and Lloyds TSB both reported sharp falls in profits for the first six months of the year; Barclays and Royal Bank of Scotland are due to report next week.