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Alliance & Leicester delivers upbeat statement despite personal lending climate

The UK's sixth largest bank Alliance & Leicester (A&L) has delivered a positive trading statement in which it says more rigorous lending conditions have helped to insulate it from rising levels of consumer loan defaults.

A&L’s unsecured personal loan gross advances were GBP565 million in the first quarter of 2006, compared to GBP890 million in the same period last year. Unsecured loan balances have remained stable compared to the end of 2005 at GBP3.5 billion, the bank said.

Personal customer deposit balances increased to over GBP21 billion at the end of March 2006 from GBP20.6 billion at the end of the previous quarter. A&L added that its current account base continues to grow, with sales of new accounts in the first quarter of 2006 significantly higher than in the same period in 2005.

Our unsecured lending asset quality remains strong, with new lending in 2006 being of better quality than that in 2005. We continue to monitor our unsecured lending performance closely and have tightened our scorecards further this year.

Our leading credit indicators are showing signs of improvement, although the proportion of balances in arrears at the end of May 2006 – at 5.7% – reflects the seasoning of the loan book and market-wide trends in unsecured lending credit quality, the bank’s statement read.

The bank has been hotly tipped as a takeover target in recent months, with French bank Credit Agricole admitting recently that it is mulling an approach, although no formal offer appears likely in the short term.