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Bradford & Bingley’s shares fall as pre-tax profit halves in 2007

Bradford & Bingley’s shares have fallen by over 10 per cent this morning as it reported a sharp fall in profits after cutting the value of risky assets.

The lender’s underlying pre-tax profit has almost halved to £126m in 2007 from £246.7m in 2006.

B&B claims that if it stripped out “unusual and extreme external events” then underlying profits rose 5 per cent to £351.6m.

Items excluded from the lender’s underlying profit in 2007 include a loss on sale of commercial and housing association portfolios of £58.0m, treasury asset impairment of £94.4m, hedge ineffectiveness of £23.5m and other fair value movements on treasury instruments of £49.7m.

The lender says that bad debt charges on its residential mortgage book had trebled to £22.5m in 2007.

The number of mortgage borrowers in arrears by three months or more has increased by 42 per cent to 6,170.

However, the lender maintained that it faced no funding problems and had £2bn of agreed credit from banks. It also says that customer deposits funded 60 per cent of its loans.

Group chief executive Steven Crawshaw says: “These results demonstrate the strength of our underlying business, which has performed well in a challenging year for the sector. With significant funding in place and our savings business continuing to attract new money, we are confident of our ability to continue to be a leading player in the specialist lending market.”

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