Bradford & Bingley back in the black with £896m profit

[vetran]

Strange

Just last week I got a letter saying tough your shares are worthless.

Looks like that will be challenged.

[Sysman]

In the olden days the banks used to lend out the money that savers had deposited with them, and wait for the borrowers to pay it back. When there was no more money to lend out then that was it and noone else could get a mortgage. Ask your parents about mortgage queues.

That wouldn't work in this day and age would it? We're now so much more sophisticated

l

building societies

For some good reason that I've completely forgotten you didn't go near a bank for a mortgage, preferring a building society. I can certainly remember mortgage waiting lists. One of the reasons that Barrats sold so many houses is that they had a cosy arrangement with certain building societies and get a mortgage quickly for their customers.

[AtW]

Was there ever a better time to have a house, a mortgage, debts and no savings.

It was even better apparently during last days of Weimar Republic

[TimberWolf]

Was there ever a better time to have a house, a mortgage, debts and no savings.

[Gonzo]

Hasn't it always been the case that banks (as opposed to building societies) borrow money from the govt/Boe at a low rate and then lend it out again at higher levels? They'd like to charge account fees too.

No it hasn't. They used to borrow it from the "money markets" i.e. each other, but that all went tits up after some French bloke let slip that no one had any idea how risky the loans were, which is why the central banks had to step in and "bail them out" i.e. provide the loans that they could no longer obtain from the markets.

In the olden days the banks used to lend out the money that savers had deposited with them, and wait for the borrowers to pay it back. When there was no more money to lend out then that was it and noone else could get a mortgage. Ask your parents about mortgage queues.

That wouldn't work in this day and age would it? We're now so much more sophisticated

[doodab]

Hasn't it always been the case that banks (as opposed to building societies) borrow money from the govt/Boe at a low rate and then lend it out again at higher levels?

No it hasn't. They used to borrow it from the "money markets" i.e. each other, but that all went tits up after some French bloke let slip that no one had any idea how risky the loans were, which is why the central banks had to step in and "bail them out" i.e. provide the loans that they could no longer obtain from the markets.

[MrMark]

FFS - banks pay 0% on savings yet they charge 5-7% on mortgages, and more on other debt - there surely has never been life more profitable to banks, all thanks to BoE ffs!

Hasn't it always been the case that banks (as opposed to building societies) borrow money from the govt/Boe at a low rate and then lend it out again at higher levels? They'd like to charge account fees too.

[AtW]

The lender reported an £896m pre-tax profit for the six months to June after impairment provisions on its £38bn mortgage book halved to £161m. The bank, which posted a £160m loss in the first half of 2009 and £196m for the year as a whole, was helped by a £712m exceptional gain from buying back its own debt at a discount. But even after one-off items are stripped out, B&B made £79.4m profit in the half year.

Investors in Britain's other state-backed banks, which report next week, will be encouraged by B&B's solid performance. Lloyds Banking Group, Royal Bank of Scotland and Northern Rock area all expected to have had a relatively strong first half, lifting hopes that the taxpayer will eventually make a profit from the banks' rescue.

However, B&B's said it may be some time before the Government recovers its £27bn loan to the buy-to-let business. "Debt will be repaid out of the cash flows generated by the group during its wind-down," B&B said. "Many of these ... have contractual maturities of 25 years or more. Consequently, the timing of the repayment is uncertain."

B&B has made progress on its run-off plan, shrinking the balance sheet by £2.8bn through asset sales and redemptions. It is being merged with Northern Rock's "bad" assets to strip out costs as both businesses are gradually wound down.

Low interest rates helped limit problem loans to 4.72pc of the book, compared with 5.88pc in the first half of 2009 and 5.54pc six months ago. Landlords have been rescued by low rates as falling rents threatened to leave them having to fund their mortgages out of their savings.

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Bradford & Bingley back in the black with

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FFS - banks pay 0% on savings yet they charge 5-7% on mortgages, and more on other debt - there surely has never been life more profitable to banks, all thanks to BoE ffs!