Alliance & Leicester reports fall in half-year profits

News

20 July 2001

Managing director Peter McNamara said that since the group’s flotation in 1997, it had been regularly mentioned in association with potential sector consolidation. “We have been clear and consistent in our statements on this subject: we believe that increased shareholder value can best be delivered by implementing our strategy.

“We have also consistently said that, as a board, we have a duty to consider serious offers for the business, should any occur which clearly represent superior returns to our shareholders.”

He added that he believed A&L could deliver “long-term competitive advantage” from its current size, which, with nearly 6m personal customers, made it “big enough to be powerful but small enough to be agile”.

The comments come amid increased speculation about the banking industry, following Bank of Scotland’s planned merger with Halifax, and Lloyds TSB’s attempted bid for Abbey National, which has been blocked by the Government last week.

A&L has regularly been the subject of speculation about a merger or a takeover. Recent speculation has suggested that Abbey was considering a merger proposal for the group, while National Australia Bank – owner of Clydesdale and Yorkshire Bank – has been often tipped as a potential suitor.

A&L has however been putting in place a growth strategy over the last year, to deliver franchise growth, keep customers for longer, sell more to existing customers, have a more efficient cost base and maintain high asset quality.

McNamara today said that the first half of 2001 had shown “considerable evidence” that the group was “successfully creating a new Alliance & Leicester” and added that it was confident of meeting strategic objectives set in October.

However, the investment in this impacted on pretax profit figures for the six months to 30 June, which fell to £208m, down from £246m. Figures, which were in line with analysts’ expectations, included £30m investment in its strategy.

EGi News 20/07/01

Mortgage bank Alliance & Leicester (A&L) today said that it had a “duty to consider serious offers for the business” as it reported a drop in half-year profits after investing in its growth strategy. Managing director Peter McNamara said that since the group’s flotation in 1997, it had been regularly mentioned in association with potential sector consolidation. “We have been clear and consistent in our statements on this subject: we believe that increased shareholder value can best be delivered by implementing our strategy. “We have also consistently said that, as a board, we have a duty to consider serious offers for the business, should any occur which clearly represent superior returns to our shareholders.” He added that he believed A&L could deliver “long-term competitive advantage” from its current size, which, with nearly 6m personal customers, made it “big enough to be powerful but small enough to be agile”. The comments come amid increased speculation about the banking industry, following Bank of Scotland’s planned merger with Halifax, and Lloyds TSB’s attempted bid for Abbey National, which has been blocked by the Government last week. A&L has regularly been the subject of speculation about a merger or a takeover. Recent speculation has suggested that Abbey was considering a merger proposal for the group, while National Australia Bank – owner of Clydesdale and Yorkshire Bank – has been often tipped as a potential suitor. A&L has however been putting in place a growth strategy over the last year, to deliver franchise growth, keep customers for longer, sell more to existing customers, have a more efficient cost base and maintain high asset quality. McNamara today said that the first half of 2001 had shown “considerable evidence” that the group was “successfully creating a new Alliance & Leicester” and added that it was confident of meeting strategic objectives set in October. However, the investment in this impacted on pretax profit figures for the six months to 30 June, which fell to £208m, down from £246m. Figures, which were in line with analysts’ expectations, included £30m investment in its strategy. EGi News 20/07/01