A&L warns on retail competition as first-half profits reach £252m

Alliance & Leicester, the high street bank, warned yesterday of intense competition ahead in the retail market after delivering what most City analysts said were lacklustre results. Pre-tax profits at £252m for the first half came in slightly ahead of the £247m notched up in 1999.

Alliance & Leicester, the high street bank, warned yesterday of intense competition ahead in the retail market after delivering what most City analysts said were lacklustre results. Pre-tax profits at £252m for the first half came in slightly ahead of the £247m notched up in 1999.

However, analysts expressed concern that £4m of that increase came from lower bad debt provisions and that there was minimal growth in lending despite the buoyant economic climate. The City had been primed to expect little volume growth in the mortgage market but there was disappointment that in other areas of the business, where Alliance & Leicester has grown strongly in the past, the bank appeared to be going backwards. The figures, they said, appeared to confirm the damage that the six months without a chief executive had done to the business.

Retail banking interest margins were better at 2.49 per cent, compared with 2.36 per cent the year before. But at group level it was down from 2.7 to 2.5 per cent. John Windeler, executive chairman, sought to put a brave face on the figures.

He insisted that after the management changes, announced earlier this week, that "this is a new chapter in the evolution of Alliance & Leicester."

Further to Wednesday's announcement of a top management shake-up, Alliance & Leicester is bringing on board Mike McTighe of Cable & Wireless and Jonathan Watts of Colt Communications, as non-executives.

Shares were down 10.5p to 486.5p.