BRADFORD & BINGLEY, the last of the British banks to report, bucked the trend of double-digit earnings growth with half-year pre-tax profits that were up only 5 per cent on last year.

The former building society, which is shedding its non-core businesses, made £140 million profit for the six months to June 30, compared with £132.9 million last time. The small rise compares unfavourably with the other British banks, which were boosted by the consumer lending boom.

Steven Crawshaw, who took over as chief executive in March, said that the bank was making progress in its plans to shed businesses that do not match its strategy. He added: “We expect the sales to be completed by the end of the year.”

The businesses on the auction block include Charcol, the mortgage broker, and its chain of estate agents and independent financial advisers. Mr Crawshaw would not comment on the prices the bank expects to get for the businesses, nor on whether the bank would be forced into write-offs after the sales.

“The implementation of the strategic review is leading to a simplified, more focused business with strong prospects,” he said.

The bank, which has a large position in the buy-to-let market, said that there would be a gradual slowdown in the housing market, adding that it had already seen early signs that the market was beginning to cool.

However, Mr Crawshaw said that the housing market was underpinned by high employment and low interest rates, which showed no “material sign of deterioration”. He said that he did not believe there would be a crash in house prices.

“We believe that house price growth will slow over the remainder of the year and that the fundamentals necessary for a sudden correction are not evident. A gradual slowdown is the most likely outcome,” he said.

The bank has already announced 450 job cuts this year, which will shave £40 million off costs. It has been cutting costs to regain profitability after its interest rate margin narrowed.

The bank said there had been further pressure in the first half on the net interest margin, which has fallen by nine basis points to 1.35 per cent since the end of 2003. Overall the margin has fallen from 1.69 per cent over the past 12 months.

Total lending balances were £27.9 billion, an 8 per cent increase on the total at the end of 2003. Gross new lending was 4 per cent ahead of the first half of last year at £4.8 billion. The group’s lending book is 80 per cent residential. Half is buy-to-let loans and 14 per cent takes the form of selfcertified loans.

Mr Crawshaw said that the competitive mainstream mortgage market remained unattractive to the bank and that the pressure on the group’s margins was easing as specialist lending became more dominant on the balance sheet.

Credit quality remained strong, he added, while arrears on the whole book had continued to decline as a result of the benign economic circumstances, a tighter collection policy and limited lending to first-time buyers. Arrears on the buy-to-let loans were up slightly, but the bank said they remained better than the average for the market. Total provisions for bad debt were £53.2 million, up 7 per cent on the end of last year.

The interim dividend is to rise 4 per cent to 5.7p.