Alliance confident despite profits fall

Alliance & Leicester posted lower half-year profits today as a slowdown in unsecured loans offset strength in mortgages and commercial lending.

The banking group, which has been in the takeover spotlight for most of this year, said changes to its credit criteria and challenging conditions meant loan advances were £360m (€527m) lower at £1.1bn (€1.6bn) in the half year.

Mortgage business continued to build on the momentum of 2005, but with the company booking an £18m (€26.4m) rise in bad debt charges Alliance posted operating profits of £268m (€392m), a fall of £4m (€5.8m).

Despite the drop, Alliance said it remained on course to meet its strategic targets, helped by a £6m (€8.8m) reduction in operating expenses. It added that it had identified a further 45 sites to be refurbished with its new branch design, following good feedback to the 12 outlets converted to date.

Chief executive Richard Pym said: “Alliance & Leicester is changing, and the pace of that change is accelerating. We remain confident of our strategy and of our ability to deliver it.”