B&B reaps risky loan rewards
BRADFORD & Bingley today soothed worries about its aggressive push into higher-risk mortgages, saying bad debts were low and that it would meet this year's profit forecasts.
Underlining the commitment to its strategy of lending to non-standard borrowers, the former building society also announced plans to buy another £1.4bn of mortgages from American finance house GMAC-RFC.
B&B, which now has about one-third of its £23bn loan book extended to buy-to-let landlords and borrowers unable to secure normal loans, said credit quality continued to be good and that its second-half provision for bad debts would be 'low'.
It also announced a profits boost in its distribution arm, which includes a big estate agency business and fastexpanding network of independent financial advisers.
Total profits would be in line with the forecast range of £249m-£266m, it promised.
Chief executive Christopher Rodrigues said: 'We approach 2004 with continuing strong demand in our core markets and healthy new business pipelines.' He forecast house price rises at a more moderate pace than in 2003, underpinned by low unemployment and interest rates.
The positive picture contrasts with a difficult first half for B&B, when tough trading in the IFA and estate agency arms led to a fall in pre-tax profits from £135m to £132m.
Demand for IFA products remained subdued, it said, 'and we are reducing costs accordingly'.
