“The momentum seen in the first half of the year has continued and we have achieved strong growth during the year whilst maintaining strict cost control. We expect the demographic drivers of our specialist markets to remain positive for the foreseeable future, which should ensure outperformance compared to the wider mortgage market.”
Steven Crawshaw, Group Chief Executive
We expect underlying profit before tax and exceptional items for the full year 2006 to be in line with current market consensus*
Lending volumes
- The Lending business has performed very well during the second half of the year, with continued strong new business volumes
- Our pipeline of new business is at record levels
- We have recently agreed with GMAC a forward sale agreement to acquire portfolios of mortgages from them over the next three years, thereby securing the long term future of this excellent business relationship
Margins
- As predicted, there has been a small decline in the Group’s net interest margin during the second half as a result of the change in the mix of funding to support our balance sheet growth
Credit Quality
- Arrears levels have reduced since the half year in absolute numbers and as a percentage of loans
- The impairment charge is likely to be lower in the second half of the year compared to the first half reflecting lower arrears, fewer properties in possession and the ongoing stable credit environment
Retail and Savings
- Early indications are that the switch in November from mortgage broking to offering B&B mortgage products in the branches has been well executed and demand is meeting our expectations
- We have generated good growth in retail savings balances, supporting our diversified funding strategy
Capital
- We remain, as planned, within our Tier 1 range of 7% - 8% and are working closely with the FSA in preparation for the implementation of Basel II in 2007
Operating Costs
- The Group continues to exercise strict cost control whilst investing in growing the business
- As predicted, the year on year rate of cost growth has moderated in the second half, producing a further improvement in the cost:income ratio
Market
- We expect to see continued growth in the housing market. Affordability levels remain good by historical standards, despite the recent interest rate rise. Continued house price inflation driven by the underlying shortage of housing should continue to support favourable market conditions
- Our specialist markets remain strong and underpinned by demographic trends
* A B&B poll of 18 analysts’ estimates indicates a mean consensus for 2006 underlying profit before tax and exceptional items of £332.8m. The range of forecasts is from £323.5m to £339.2m.
Conference call details
Bradford & Bingley will hold a conference call at 0930 hours today with analysts and investors to discuss the information that is contained within this statement.
Live dial in number: +44 (0) 20 8996 3900
Passcode: 787741
Replay dial in: + 44 (0) 1296 618676
Passcode: 278175
The replay of the conference call will also be available on our website at www.bbg.co.uk
| Forthcoming events |
| 2006 prelim results announcement |
13 February 2007 |
| Ex-dividend date |
21 March 2007 |
| Record date |
23 March 2007 |
| Annual General Meeting |
24 April 2007 |
| Dividend payment date |
04 May 2007 |
| Contacts: |
Investor Relations
Katherine Conway
+44 (0) 1274 554928
Neil Vanham
+44 (0) 1274 806341 |
Media Relations
Simon Moyse, Finsbury
+44 (0) 20 7251 3801 |
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.