Alliance & Leicester delivers strong interim performance
* Record sales of mortgages, personal loans and current accounts
* Pre-tax profits, earnings per share and return on equity all up
* On track to meet year-end targets
Pre-tax profits were £320 million - up 22%* - boosted from an underlying profit of £268 million by the sale of the Commercial Bank’s merchant acquiring business in April**.
Underlying earnings per share were 42.0p, up 7% on the first six months of last year. This figure was boosted to 49.6p a share - 27% up - when the benefits of the sale of the merchant acquiring business are included. The interim dividend, which will be paid on 11 October, will be 15.7p per share, up 10% on the 14.3p interim dividend declared last year. Alliance & Leicester reported that it is on track to meet its full year targets.
The Group has seen strong growth in sales - especially in the key areas of mortgages, personal loans and current accounts.
Gross mortgage lending for the first six months of 2004 was £5.5 billion - 74% up on last year. Net lending - the figure for lending after redemptions are taken into account - was £2.5 billion, higher than the total for the whole of 2003. Mortgage arrears continued to improve.
New current account openings were up 40%, with 120,000 new accounts bringing the total number of current accounts to 2 million. New personal loans were 20% up on the first half of 2003, at £1.3 billion, with the credit quality remaining very strong. Savings balances were up by £40 million to £18.9 billion.
Alliance & Leicester has continued its strategy of offering good value products, with a total of 900 ‘Best Buys’ in the national press. New product launches of savings and current accounts have been well received and bode well for the second half of the year. Mortgage margins are also expected to benefit from new products launched in May which involve a lower initial, upfront profit impact whilst still offering excellent value to customers.
The Group expects house price inflation to slow during the remainder of 2004 and believes that the core residential lending markets in which Alliance & Leicester operates are not likely to see any major downturn.
The Wholesale Bank also saw growth in key areas - with cash sales to banks and other financial institutions up 21% to £23.5 billion, an increase of 70% in new business banking accounts, commercial lending was up by £200 million to £4.3 billion, with asset quality continuing to be good.
Commenting on the results, Group Chief Executive Richard Pym said: "Our strategy continues to produce good results. We have delivered growth in all core product areas, particularly mortgage lending, which is up 74% compared with this time last year. This growth is adding valuable business for the Group and has been achieved without changing our high credit standards.
"We remain on track to achieve our primary target for 2004 of delivering double digit growth in earnings per share. We are also on track to hit our supporting objectives.
"Looking to the future, Alliance & Leicester is in great shape. We are focused on our core strengths and we are building a new model for the future of retail banking. We are a ‘direct bank with a high street presence’, responding to customers’ changing requirements and their desire for good value, straightforward products."
