Warning as Alliance & Leicester profits dive

British mortgage bank Alliance & Leicester warned today of a “challenging” year ahead, as it reported a 29% drop in 2007 operating profits following a £185m (€244m) hit from the credit crunch.

The group said funding would remain a priority and pledged it would keep a tight control on lending – a day after it emerged that A&L was one of a number of lenders to pull the plug on controversial 125% mortgages.