Beleaguered lender Bradford & Bingley today said it had crashed into the red in the first half of 2008, after credit crunch losses and rising bad debts.
The buy-to-let specialist made pre-tax losses of £26.7m, compared with profits of £180.4m in the same period last year.
B&B said bad debt charges on its lending had jumped to £74.6m from just £5.3m last year as more borrowers struggled to keep up payments.
The firm also wrote off £155m on investments hit by the continuing financial turmoil.
B&B added that it was cautious over prospects for the rest of the year as the housing market worsened.
It said: "In the light of continuing weakness in the housing market and the wider economy, we continue to expect arrears and repossessions to increase for the remainder of the year, although we will be putting further resources into tackling the problem."
The results cap a turbulent six months for B&B, in which the lender has lost its chief executive and unsettled the City with twice-rehashed plans to strengthen its finances by raising money from shareholders.
The company, which eventually succeeded in raising £400m, said its main buy-to-let market remained strong but planned to cut back on lending until the economic environment improved.
"In terms of lending, the main area of focus remains buy-to-let, where tenant demand remains strong and rents are rising.
"However, we plan to reduce mortgage volumes in the second half and into 2009 until more favourable economic conditions return," the group said.
New chief executive Richard Pym - the former boss of Alliance & Leicester who joined last week - will set out his plans for the business in the autumn, with the group looking at cutting costs and boosting retail deposits in an "extraordinary market climate".
The firm is also attempting to renegotiate the terms of a deal under which it buys mortgages from US financial services company GMAC as arrears rise.
Chairman Rod Kent said the first six months of the year "have, to say the least, been very challenging" and called the losses "clearly disappointing".
He described the saga of the group's right issue as a "tortuous journey" but added that the fundraising exercise had given the bank a strong capital base.
Mr Kent added that buy-to-let - which accounted for more than half of its mortgage book - was performing better than its acquired loan portfolio, with Mr Pym calling the sector "good banking business".
Mr Pym added: "Only where we have stretched lending criteria have we had a problem, and we are not going to do that again."
B&B's shares however fell 1 per cent today in reaction to the results. Overall, the stock has slumped 87 per cent during a painful past 12 months for the lender.
Collins Stewart banking analyst Alex Potter said: "B&B's results were little short of appalling, but this was expected.
"Looking forwards, guidance is for margins to continue falling and arrears continue rising. Earnings outlook is therefore very weak."Reuse content