A&L posts results at top end of hopes

Banking group Alliance & Leicester posted an annual profits rise of 16% today after hitting all its strategic targets in 2004.

The results – featuring bottom-line profits of £608m (€880m) – were at the top end of expectations and came in the face of “a very competitive environment”.

A&L said it was confident of further growth for its core markets this year but believed the rate of improvement would be slower than in recent years.

Among the targets hit in 2004, A&L said it achieved its aim of accelerating the rate of revenues growth by posting a rise of 2.7%, up from 2.5% achieved in 2003. At the same time, it kept operating costs at levels below last year.

And in its primary target of double-digit percentage growth in earnings per share, the company said it met the target with a 12% improvement. Operating profits were £556m (€805m), up 6% on a year earlier.

Chief executive Richard Pym said the core retail business increased market shares in current account openings, new personal loans and net mortgage lending.

He added: “We have a coherent strategy and business model aligned to the changing needs of customers in an environment of lower margins and intense competition.”

The retail business saw profits increase by £5m (€7.2m) to £446m (€645.8m), after charging one-off costs of £9m (€13m) relating to the closure of 46 branches. The move, which left A&L with 254 outlets, reflected the increasing popularity of internet and telephone banking.

A&L said more than 500,000 customers were now registered for its internet banking service, an increase of 300,000 since the end of 2003. The number of internet transactions has more than doubled in the past year.

The company added that growth of its current account base was key to its strategy as customers now appeared more willing to switch banks. It opened 228,000 such accounts in 2004, a 25% increase compared with 2003.

In the mortgage market, A&L claimed an industry share of 3% after gross lending of £8.7bn (€12.6bn) came in 7% higher than in 2003.

The company said shareholders would receive a total dividend payment of 48.3p a share, an increase of 10% on a year earlier.

A&L has more than half a million customers who still hold the free shares they received at the time of the group’s demutualisation in 1997.