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A&L profits almost wiped out by crunch; in association with RBS.

ALLIANCE & Leicester yesterday said the credit crunch turmoil had almost completely wiped out profits in the first six months of the year.

The bank, which has agreed a pounds 1.26bn sale to Abbey's Spanish banking parent Santander, reported interim pre-tax profits of pounds 2m, down from pounds 290m.

A&L said the Santander takeover provided it with greater stability and certainty at a time of "significant external risks".

The bank said it took a pounds 398m knock from the credit squeeze in the first half. But this was up just marginally on the figure reported in May and only pounds 209m of the hit affected the A&L's bottom line. Underlying core operating profits - with credit crunch writedowns and funding costs stripped out - rose 2% to pounds 301m, said A&L. The group's share of gross lending - all new business and advances - has more than halved to 1.6% from 3.4% in the first half of last year.

But net lending, which includes customers who are taking their home loans to other lenders, fell from a 4.2% market share into negative territory as the bank lost more borrowers than it gained.

A&L's half-year bad debt charges rose to pounds 62m from pounds 56m in the same period last year.
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Publication:The Journal (Newcastle, England)
Date:Aug 2, 2008
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