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Alliance & Leicester reports 30 per cent profit drop ahead of “challenging” year

Alliance & Leicester has reported a 30 per cent drop in pre-tax profits, from £569m to £399m, and warned of a challenging year ahead for the lender.

Share in the lender fell 12 per cent, from 528p to 461p, by 9.30 this morning.

Profits were hit by a write down on sub-prime business. Excluding the write-down operating profits rose by 3 per cent, from £585m to £602m, for the year ended December 31, 2007.

A&L achieved £4.8bn of net mortgage lending in 2007, representing 4.4 per cent of the market.

The results show the lender’s combined secured and unsecured loan product, PlusMortgage, which was pulled this week, had net advances in the year of £625m, with a further £55m of unsecured loans.

A&L finance director Chris Rose says: “The trading outlook for financial services will be challenging in 2008, 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 is 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 help us increase cross-selling, strengthen customer relationships and improve efficiency still further

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