A&L hit by mortgage slowdown
HIGH Street bank Alliance & Leicester has warned of a 'significant slowdown' in mortgage lending during the autumn. However, the company said its 2004 profits are set to meet the City's expectations.
The bank, the UK's seventh largest, is expected to earn £549m, up 4.6% on 2003. The figure excludes a £52m one-off gain from selling a payments processing business.
'The UK mortgage market has seen a significant slowdown in the third quarter of 2004,' the company said in a trading statement. Net lending for the quarter is around 3% lower than in the same period in 2003 compared with an increase of around 20% in the first half of the year.
It forecasts interest rates to peak at about 5%, and that net UK mortgage lending would fall 10% to £90bn in 2005, down from an estimated £100 in 2004.
There was also little sign of bad debts with December mortgage arrears 'significantly' down on the year.
{2}The group is facing a weakening property market, slower mortgage demand, and tougher competition among UK High Street banks.
'We believe growth in our core markets will continue, albeit at generally slower rates than seen in recent years, and we see no easing in competitiveness in UK banking,' said Richard Pym, chief executive.
A&L launched an improved version of its 'valued-added' Premier Plus current account in July. Sales of new current accounts in the first nine months of 2004 were similar to the number opened in the whole of 2003, the bank said.
However, competition in the current account market has become intense with smaller banks attempting to break the grip of the Big Four banks. Today, Halifax, owned by HBOS, launched the first current account to give cashback on a debit card.A&L shares were up 1½p at 879½p by mid-morning.
