Bradford & Bingley announces a £71 million pre-tax loss
Bradford & Bingley, which was effectively bailed out by the UK government and split into two, has today reported pre-tax losses of £71 million for 2009, which is actually better than originally forecast when the company was taken over by the government. This compares favourably to a loss of £278 million in 2008 although there are concerns going forward regarding the quality of the loan book and the potential increase in provisions.
It was also revealed that the company has not only been hit by bad debts but a number of potential frauds have been uncovered and are being investigated further. In total £884 million has been set aside against residential loans, which is significantly higher than the £468 million set aside in 2008. In general there has been an increase in potential provisions for the future with £388 million also set aside for fraud and professional negligence which is well up on the corresponding figure of £175 million.
While the number of customers more than one month in arrears has fallen from 31,500 in 2008 to 30,000 at the end of 2009 this is still a massive problem for the group and will hold back recovery. Quite how the UK government will unravel the Bradford & Bingley loan book, without leaning on taxpayers, remains to be seen.
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