Alliance & Leicester commercial banking recorded a core
operating profit increase of £11m to £89m for the first half of
2008. The division’s total revenues reached £265m, which comprised
46 per cent of the group’s revenue total. The division’s net
corporate lending was £438m and corporate lending balances were
£8.2bn for the end of June 2008. The growth in balances reflects
both new lending and a lower level of redemptions, as corporate
customers decrease their levels of refinancing due to market
difficulties, the interim statement said.

While A&L commercial bank’s operating expenses were £136m,
43 per cent of the group’s expenses, it also recorded the lowest
impairment charges of all the bank’s divisions of £8m.

Commercial lending balances were also up £600m to £9bn.
Operating leases comprised £300m while finance leases and hire
purchase comprised £1.9bn of the book. Shipping and property
finance constitutes the largest proportion of A&L’s commercial
lending book, with a respective share of 18 per cent and 17 per
cent. The film sector closely follows (11 per cent), as well as
transport and aviation (both nine per cent).

The lending book is also well diversified in terms of the size
of individual lending facilities, the statement said. It has 18
loans, which total £2.2bn and have an outstanding balance of over
£50m, as well as a £421m finance facility secured by the underlying
asset and a cash deposit. A further 208 loans totalling £4.5bn have
outstanding balances of over £10m, while the remaining £2.3bn of
lending facilities has balances of less than £10m.

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