Mortgage lender Alliance & Leicester said that the more than 40pc jump in its bad debts last year represents a peak.
Bad debt charges increased to £105m from £74m in 2005 as Britain suffered from record levels of personal insolvencies. Much of Alliance & Leicester’s bad debt charges stem from unsecured personal loans for which the bank expects the charge to fall next year after tightening their lending criteria.
New unsecured personal loans fell to £2.3bn last year from £2.5bn in 2005. Around 5.6pc of unsecured personal loans were in arrears at the end of last year. Chief executive Richard Pym said: “Changes to our credit criteria have resulted in new loans written in 2006 being of higher quality than in 2005.
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“We continue to believe that the proportion of loans in arrears is around its peak.”
Despite the higher impairment charges the bank reported a 4pc rise in pre-tax profit to £569m while total income went up 5.7pc to £1.5bn. Earnings were boosted by higher mortgage lending with new mortgages rising to £12.6bn last year compared to £11.1bn in 2005.
The company plans to introduce more self-service technology into its operations which it said “is likely to result in some redundancies, although we have no specific programmes planned at this time”.
The bank also delivered a fairly bullish outlook statement despite the three quarter-point increases in interest rates since August. Mr Pym said: “Despite the recent bank rate increases, we expect the commercial and mortgage lending markets to remain strong in 2007, although we expect slower rates of growth than in 2006.
“In 2007 we will continue to focus our plans for lending growth in the UK homeowner and commercial sectors.”
The bank plans a share buyback of up to £300m this year.
Source
http://www.telegraph.co.uk/money/main.jhtml?
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