B&B's £150m buyback plan

BRADFORD & Bingley unveiled a £150m share buyback and provided evidence that its strategy of pursuing riskier lending opportunities is bearing fruit.

Profit before tax and exceptionals grew 9.4% last year to a record £253.1m despite a £1bn fall in the total lending book, taking it to £18.7bn. Chief executive Christopher Rodrigues said this reflected a 12% fall in customers after the bank's stock market float in 2000 and efforts to increase lending margins rather than volumes.

Pursuit of this higher-risk, higher-return business triggered a rise in the bad debt charge to £10.8m from £8.2m. Rodrigues said B&B was targeting buy-to-let business, the self-employed and other non-conventional borrowers from whom it was able to make higher margins. This helped pushed up net interest income from £425.8m to £442.8m.

Profit from the financial services arm fell from £23m to £13.9m as the group invested in a growing number of advisers and brand promotion. B&B incurred exceptional costs of £18.7m during the year, most of which stemmed from branch closures. Underlying costs rose 2% to £456.1m.

The year's dividend is up 20% at 13p.

B&B: is it time to check-out?