Bradford and Bingley get back into the black

NATIONALISED lender Bradford & Bingley yesterday revealed it returned to profit in the first half of 2010, but still owes a mammoth £27 billion to the taxpayer.

The group failed to make a dent in repaying its 18.4bn government bail-out cash while it is also 8.6bn in debt to the State through a working capital facility to finance operations.

However, lower bad debts and bottom line profits helped B&B call on less working capital than the 9.5bn expected.

The lender moved out of the red with underlying pre-tax profits of 79.4 million in the six months to 30 June.

Bad debt charges reduced to 863.3m from 884.1 million at the end of 2009 as fewer borrowers fell behind with their repayments. B&B said arrears levels of cases three months or more in arrears reduced 18 per cent since December to 15,653.

The group also continued to run down its mortgage book as part of its plan to repay state cash, seeing redemptions of 1bn in the first half.

B&B head Richard Banks said: "I am pleased to announce that we have returned to profit and made great progress against all our financial targets."

Operating costs also fell at the lender, down to 58.3m from 65.3m a year earlier - despite staff numbers increasing to 992 as it took on more employees in its arrears and customer management divisions.

B&B is set to merge with fellow nationalised player Northern Rock within the next year.