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Leeds boosts profits by 22% but bad debts soar: Building society fails to name new chief executive

THE LEEDS, Britain's fifth biggest building society, has shrugged off the embarrassment of its recently aborted merger with the National & Provincial by reporting a 22 per cent increase in annual pre-tax profits from pounds 152.7m to pounds 186.2m.

City analysts welcomed the figures despite a 25 per cent leap in bad debts to pounds 131.1m. The Leeds' year to 30 September includes the difficult devaluation period last year. Most other societies included this period in their previous year's figures.

There was disappointment, however, that the Leeds had failed to name a new chief executive to replace Mike Blackburn, who went to the Halifax in the spring.

Many had expected a replacement to be announced with the results. It was Mr Blackburn's departure that prompted the Leeds to approach N&P's chief executive, David O'Brien, as a replacement. Mr O'Brien was then supposed to bring his society with him. The deal foundered on differences in management style.

Malcolm Barr, chairman, said: 'In another tough year for the housing market, the Leeds has produced a set of results which validate our policy of maintaining a tight control on costs and careful management of the net interest margin, while recognising the necessity of investing for the future.'

Analysts were impressed that the Leeds managed to increase operating profit before provisions by 23 per cent to pounds 317.3m, and strengthen the key reserve asset ratio from 4.7 per cent to 5 per cent in such a difficult market. The total UK mortgage lending market fell from pounds 58bn to pounds 50bn over the year.

The increased bad debt provisions were caused partly by new accounting conventions, which include more loans in the total. Mr Barr said: 'We have seen a steady improvement in our arrears position and our stock of properties in possession has fallen substantially during the year.'

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