Car Insurers Debate Over Future Profits

UK car insurers have been running an unprofitable business for 14 years. Independent market analysts, Datamonitor, say 2009 looks to be a profitable year despite the doubts

March 13, 2008

Budget Report Expectations

Chancellor Darling's Budget Report is expected to raise taxes on alcohol, fuel emissions, flights and many other issues concerning the economy. Tax burdens expected to increase on poorer families

March 12, 2008

Card Fraud Rises Again

Card fraud has increased over past year. Whilst chip and PIN technology has been successful in the UK, criminal activity overseas has increased 77 per cent

March 12, 2008

Tax Cuts Needed To Restore Confidence

Appeals for corporate tax cuts are submitted to the Treasury as it prepares its Budget report this Wednesday. Business and banking sectors are worried about the direction of the UK economy

March 10, 2008

First Time Buyers Take Hit From Stamp Duty

Stamp duty tax has not kept up with the rate of increase in house price inflation over the past decade. Yet another hurdle first-time buyers must leap over to get on the property ladder

March 10, 2008

Read all Finance News

Profits Down By 30% For Alliance And Leicester

This week UK bank Alliance & Leicester reported that their annual profits were down by 30%. Like many banks the A & L was affected by the slowdown in the US housing sector which led to a dramatic increase in sub-prime mortgage defaults.

The bank announced that following on from the global credit crunch it was in for a rocky year 2008. Its funding costs were already estimated to be £150m higher than normal.

Last year pre-tax profits came in at £399m following an assessment of its exposure to risky assets, which amounted to a revised estimate of £185m. This profit figure showed a considerable decline from 2006 when profits reached £569m. Shares were also down falling as low as 428p, the lowest level since the A & L began trading.

Equity analyst Keith Bowman, at Hargreaves Lansdown Stockbrockers said:

"Profits have come in at the lower end of already significantly reduced expectations and still elevated funding conditions in the wholesale markets will surely be pressurising profit margins going forward."

Finance Director for the A & L bank group Chris Rhodes said:

"The trading outlook for financial services will be challenging in 2008, and we will maintain the prudent approach to lending which has led to our customer lending asset quality being better than industry averages."

With over 27% of group revenues coming from both mortgages and savings, Mr Rhodes added that the Alliance & Leicester was very much diversified. He said:

"The A & L is not dependent on the performance of a single market."

It would appear that given the recent market conditions all previous targets for annual earnings are no longer appropriate. Analysts are closely following all bank reports and their earnings as a means to determine whether or not the current problems within the financial markets are coming to an end.

Published on February 21, 2008

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