Alliance sees loans slowdown

Alliance & Leicester today revealed a sharp slowdown in unsecured lending after tightening its criteria for loans in a slower UK market.

Alliance & Leicester today revealed a sharp slowdown in unsecured lending after tightening its criteria for loans in a slower UK market.

The banking group said unsecured personal loan advances were £565m (€825m) in the first quarter of 2006, compared with £890m (€1.3bn) for the same period a year earlier. It added that the proportion of balances in arrears at the end of May stood at 5.7%, against 5.1% at the end of last year.

Alliance pointed out that new lending was of better quality than in 2005 after it tightened lending criteria in the face of a tougher consumer environment.

In a trading statement ahead of half-year results on July 28, Alliance said its focus on residential mortgages paid off with growth in market share.

Gross lending in the first quarter was £3.2bn (€4.7bn), resulting in a market share of 4.3% – far higher than the 2.7% seen a year earlier.

Alliance said its share of the net mortgage lending market was 6.3%, up from 2% last year, after loans worth £1.4bn (€2bn) in the period.

It said it would soon start to distribute buy-to-let, self-certified and sub-prime specialist mortgage products.

Alliance added that the quality of its mortgage book remained “excellent” with the proportion of accounts in arrears lower than at the end of 2005.

The company did not provide any comment on the takeover situation regarding possible interest from Credit Agricole.

The French banking group said in May that Alliance was among potential targets, but stressed it had not put any proposals to the company’s board and its evaluation of future growth opportunities was at a preliminary stage.

Investors have been on standby for a takeover in the UK banking sector for several months, with Alliance seen as the leading candidate.

As well as Credit Agricole, speculation has linked Abbey National’s Spanish owner Santander – a deal that would create a rival to Halifax owner HBOS.

Shares in Alliance opened 1% lower today.

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