In its half-yearly results A&L recorded a core operating profit of £2m, down from £290m in June 2007.
A&L group chief executive David Bennett blamed the huge decline in profits on the current market conditions.
He says: “Our financial results have been significantly affected by treasury losses in the first four months of the year and by high funding costs.
“The Board is acutely aware of the significant external risks presented by deteriorating economic conditions and continuing turbulence in financial markets.”
However, Bennett says the bank’s strategy and approach has enabled the group to be resilient in a difficult trading environment.
He says: “A&L’s underlying business is in good shape, with strong customer lending asset quality and arrears rates running far better than market averages.”