A&L warns of lending slowdown

HIGH Street bank Alliance & Leicester (A&L) said today there would be a slowdown in the overall lending market this year, after its loan book was flat in the second half of 2004 compared with the previous year.

Delivering annual figures at the top end of market expectations, chief executive Richard Pym spoke of 'slower rates of growth than experienced in recent years' across the bank's own divisions ranging from personal to business banking.

Underlying profits for the year ending 31 December grew to £556m from £525m a year earlier, against analysts' average forecasts of £550m after 'very good growth in 2004 across all our businesses', Pym said.

A&L's gross mortgage lending in its core retail banking business grew 7% to £8.7bn in 2004, giving the bank a 3% share of the UK market.

Net mortgage lending in the retail business during the second half was lower than that achieved in the first half, but Pym added: 'With interest rates keeping at lower levels than most anticipated, the conditions will remain for the bank to make good growth, but probably in a market that will not be as good as 2004.'

The value of redemptions remained similar to 2003 as the bank's overall mortgage book rose to £27.9bn. A&L saw a surge in its lending of unsecured personal loans, mirroring a trend across the industry, up 23% on 2003 to £2.3bn.

Personal account customer deposit balances increased by £600m to £19.5bn.