Nothing to shout about

29 August 2008 By George Hay Follow @gfhay

The UK lender has survived its neardeath experience, appointed a new chief executive and collected £400m from a tortuous rights issue. That s the good news. The bad news is continued underperformance, an unpromising outlook and little scope to make things better.

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Bradford & Bingley made a pretax loss of £26.7m in the half year to June 30, down from a pretax profit of £180.4m in the first half of 2007.

The lender, which has lost 86% of its market capitalization in a year, made underlying pretax profit of £70.2m but took a £74.6m loan impairment loss through its P&L, as well as structured credit losses of £64.8m.

Total arrears on its lending book rose from 1.85% in December to 2.87%, a rise of 55%. In the same period HBOS rose 16% from 1.67% to 1.95%, while Alliance & Leicester rose 24% from 0.49% to 0.61%.

The company's overall net interest margin was 0.98%, down from 1.1% in December. The company predicts it will decline to 0.9% by the end of the year.

Spreads on B&B's credit default swaps – a proxy for how much its funding costs – have risen to 415 basis points. A year ago, the spread was 32 basis points.

B&B shares rallied briefly before dropping to 49.75p by 11.45am, down 1%.

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