Alliance & Leicester has denied that it is turning its back on the mortgage market after a 30 per cent drop in profits.
A spokesman insists that the mortgage market is still very important for the bank but it anticipates a lower lending volume this year. He says reports in the media that A&L has closed the door on the UK mortgage market are “over the top”.
The spokesman says A&L will focus on retaining its 100,000 mortgage customers, who will be coming off rates this year.
The firm recorded £4.8bn of net mortgage lending last year, a 4.4 per cent market share. Profits for last year fell to £399m from £569m, hit by a £185m writedown of treasury assets. Excluding the writedown, A&L says operating profits rose by 3 per cent to £602m from £585m.
It has a liquidity facility to secure funding through to 2009 but, as a result, will face an extra cost of £150m.
PlusMortgage, which is A&L’s combined secured and unsecured loan product, was withdrawn last week. It had net advances of £625m, with a further £55m of unsecured loans.
Finance director and acting chief executive Chris Rhodes says: “The trading outlook will be challenging and we will maintain the prudent approach to lending which has led to our customer lending asset quality being better than industry averages. Our business is diversified and not dependent on the performance of a single market, with just 27 per cent of group revenues coming from mortgages and savings.
“We are investing in new banking technology to helpus increase cross-selling, str-engthen customer relation-ships and improve efficiency still further.”