Bradford & Bingley will today hold a conference call with analysts ahead of the close period commencing 1st January 2004. The Group’s preliminary results are due to be announced on 17th February 2004. This statement details the information that will be covered in today’s conference call.
Overview
Bradford & Bingley has continued the strong growth in its selective lending business in the second half and profits in its distribution business have recovered. Group profits for the full year will be in line with market expectations.
(A B&B poll of 16 analysts indicates a consensus forecast of profit before tax of £260m and a range from £249m to £266m.)
Strong growth in lending balances and continued improvement in credit quality
- New selective lending has continued to grow strongly during the second half and we will enter 2004 with a healthy pipeline
- Organic growth has been supplemented by £1.4bn of loan portfolios acquired from GMAC-RFC during the year and today we announced our agreement to acquire up to a further £1.4bn of mortgage portfolios from GMAC-RFC in 2004
- The first-year cost of writing the large increase in new business has reduced lending margins in 2003 but the resulting expansion of the loan book secures earnings growth in future years
- All our lending is secured on property. Credit quality across all our loan books continues to be good. Consequently, we remain well provisioned and our second half provision charge will be low
Savings volumes remain stable at the turn of the interest cycle
- Savings balances have remained stable
- Interest rate reductions at the mid-year have had an impact on savings margins in the second half
- The recent increase in interest rates will have a beneficial effect on future earnings
We continue to manage our Treasury and capital base actively
- We are drawing on new and established funding programmes in Europe, the US and the Far East to support our strong lending growth
- We have completed our £150m share buy-back programme
- We issued £250m Upper Tier II capital in April, and a further £200m in December
- As predicted Treasury profits will be slightly lower in the second half having benefited from a falling interest rate environment in the first half on the year
Property Services performance is much improved in the second half
- The Estate Agency business has recovered in the second half as a result of management actions implemented mid-year and a stronger trading performance in the second half
- Our surveying business, SecureMove, has continued to perform well
Continued development of our broking businesses
- Our Charcol and MarketPlace mortgage broking businesses maintained their strong momentum in an active mortgage market
- The mainstream market for investment products remains subdued and we are reducing costs accordingly
- We continue to invest in our premium advice business on the back of the successful acquisitions of Holden Meehan and Aitchison & Colegrave
Market outlook for 2004
- The mortgage and housing markets will be underpinned by historically low levels of interest rates and unemployment
- We anticipate house prices will continue to rise albeit at a more moderate pace than in 2003, supported by the continued shortage of housing stock on the market
- The mortgage market is likely to remain strong, bolstered by an active re-mortgage market
Commenting on the Group’s performance, Christopher Rodrigues, Group Chief Executive, said:
“Our second half has been characterised by continued growth in our secured, specialist lending and mortgage broking businesses and a recovery in estate agency. We approach 2004 with continuing strong demand in our core markets and healthy new business pipelines. Our 2004 prospects are enhanced by today’s announcement of our agreement to acquire up to a further £1.4bn of mortgage portfolios from GMAC-RFC in 2004.”
Disclaimer
This document may contain forward-looking statements with respect to certain of the plans and current goals and expectations relating to the future financial condition, business performance and results of the Bradford & Bingley Group. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the control of the Bradford & Bingley Group including, amongst other things, UK domestic and global economic and business conditions, market related risks such as fluctuations in interest rates and exchange rates, inflation, deflation, the impact of competition, changes in customer preferences, risks concerning borrower credit quality, delays in implementing proposals, the timing, impact and other uncertainties of future acquisitions or other combinations within relevant industries, the policies and actions of regulatory authorities, the impact of tax or other legislation and other regulations in the jurisdictions in which the Bradford & Bingley Group and its affiliates operate. As a result, the Bradford & Bingley Group's actual future financial condition, business performance and results may differ materially from the plans, goals, and expectations expressed or implied in these forward looking statements.
If you would like to discuss the information in this statement, please contact:
Investor Relations
Phillip McLelland
01274 806112
Investor Relations Advisers
MacMaster & Company
Kirsten Hendrie
020 7493 9500
Media Relations
Siobhan Hotten
020 7067 5627
Media Relations Advisers
Tulchan Communications
Katie Macdonald-Smith
020 7353 4200