Bradford & Bingley in profit

The nationalised lender Bradford & Bingley said yesterday it made a profit in the first half of 2010, but still owes the taxpayer £27m.

The group failed to make a dent in repaying its £18.4bn government bailout cash during the half-year, while it is also £8.6bn in debt to the state through a working capital facility to finance operations. However, sharply lower bad debts and bottom-line profits helped B&B call on less working capital than the £9.5bn expected.

The lender, which saw its loan book nationalised and its savings arm sold to the Spanish bank Santander during the financial crisis, moved out of the red with underlying pre-tax profits of £79.4m in the six months to 30 June, against losses of £160m a year ago.

Bad debt charges fell to £863m from £884m at the end of 2009 as fewer borrowers fell behind with repayments. B&B said cases three months or more in arrears were down 18 per cent since December. The group continued to run down its mortgage book as it sought to repay state cash, seeing redemptions of £1bn in the first half.

B&B is set to merge with the "bad bank" of Northern Rock to save operational costs. The two are expected to be integrated within the next year.