Alliance & Leicester hits its specific targets

- Growth in all core product areas in 2004

- The UK’s fastest growing internet bank

- A record 2,400 product ‘Best Buys’

Pre-tax operating profit rose 6% to £556 million, with total pre-tax profit up 16% to £608 million – slightly ahead of analysts’ predictions.*

Earnings per share increased, with underlying basic earnings per share up 12% on 2003 at 88.2p – achieving the double digit target set*. Revenue growth was up 2.7% on 2003 on a like-for-like basis, beating the 2.5% rate achieved the previous year. Capital efficiency improved in line with targets and savings in core operating costs of £109 million were made, exceeding the £100 million target set in 2000.

The total dividend payment is up 10% to 48.3p per share. Shareholders have had a total return of over 120% since July 2000 when the current strategy was launched.**

There has been growth in all core product areas in Retail Banking. Gross mortgage lending totalled £8.7 billion, 7% up on 2003, with net mortgage lending up by 22% to £2.5 billion. Personal loans continued to grow - with £2.3 billion in advances - 23% up on 2003, marking Alliance & Leicester’s success as a direct loan provider. Asset quality remains strong, with the proportion of mortgage and personal loan arrears at the year end lower than in December 2003.

Many new customers switched to Alliance & Leicester’s market-leading Premier and Premier Plus current accounts, with 228,000 new current accounts opened, 25% up on 2003. Savings balances grew by £600 million to £19.5 billion, boosted by the launch of the market-leading Online Saver account.


Retail products achieved a record of over 2,400 ‘Best Buy’ mentions in the national press – 500 more than in 2003 and more than any competitor.

Branch sales reached record levels, with an increase of around 20% per member of branch staff. Sales over the internet continued to grow – and customers are increasingly using the internet for day to day transactions. Customers registered for internet banking now exceed 500,000 (up by over 300,000) and transactions are running at double last year’s volumes. A benchmarking study has shown Alliance & Leicester to be the fastest growing UK internet bank in 2004.

The Wholesale Banking division, consisting of Commercial Banking and Treasury, delivered a strong performance which contributed just over a quarter of the Group’s pre-tax operating profit.

Cash sales to financial institutions rose by 24% to £53 billion and cash handling volumes totalled £58.8 billion. New business banking current accounts increased by around 50% to 16,000. Commercial Lending balances were up by £600 million to £4.7 billion, with asset quality remaining good and arrears levels lower than at the end of 2003.

Overall asset quality remains strong, with the Group’s long term credit rating being upgraded by leading independent rating agency Moody’s to ‘Double A’ (Aa3) in November.

Group Chief Executive Richard Pym commented: “We achieved all of our strategic targets in 2004, delivering double-digit earnings growth and a good set of results in a very competitive environment.

“We have a coherent strategy and business model aligned to the changing needs of our customers in an environment of lower margins and intense competition. This strategy ensures that Alliance & Leicester is well placed to deliver good returns to shareholders and remain successful in 2005 and beyond.”