More on Bradford & Bingley
Bradford & Bingley: Trading statement
Bradford & Bingley (B&B), reported increased levels of arrears and declining margins in its trading update for the half year to June 2005.
The deterioration of credit quality and the erosion of margins have been experienced by all banks this year and is hardly surprising to find the same problems afflicting B&B, a weaker performer than most.
The bank does however expect to meet the consensus forecast for profit before tax and exceptional items of £297.5m.
The bank says lending has been performing “as anticipated against a subdued market” which probably mean that growth is slow. B&B’s cost reduction plans are reportedly progressing well and this may help sustain earnings.
The bank seems to be hoping that the housing market will recover in the short run, a view we think is too sanguine. The share trades at 329p, on a prospective PE (2005 earnings) of 9.9x, within the sector range. The yield is 5.5%.
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