Shares in Bradford & Bingley plunged by 16.6 per cent today to an all time low of 203.25p after the lender announced a string of write-downs on its exposure to sub-prime loans and charges relating to losses triggered by the sale of its commercial property portfolio.

The shares, which sunk as low as 205p at one point, are now trading 14.5 per cent lower than the 248p level at which the former building society was floated in 2000.

More worrying for investors, the UK's biggest buy-to-let lender reported that it has seen mortgage arrears leap by 42 per cent in 2007 and bad debts treble as more and more homeowners struggle to keep up with repayments.

The mortgage provider, which called last year an "eventful and difficult" period for the banking sector, said that five quarter-point interest rate increases since August 2006 were having an impact on its customers with the number of cases showing arrears of three months or more up from 4,337 in 2006 to 6,170 at the end of the year — equating to 1.63 per cent of Bradford & Bingley's lending.

Pressure on borrowers had also contributed to a threefold increase in bad debt charges to £22.5 million, from £7.4 million in 2006.

Bradford & Bingley, which raised £2.5 billion through a private placement last autumn so that it could continue to fund its mortgage business, was forced to make a total of £226 million of writedowns on items including poor sub-prime-related investments and the loss on sale of most of its commercial property portfolio. The writedowns reduced the lender's statutory pre-tax profit by 49 per cent to £126 million in the full year to 31 December.

Underlying profit, taking out a string of exceptional charges, was up 5 per cent to £351.6 million, the lender said.

B&B said that it had written down the value of its assets in structured investment vehicles (SIVs) by £64.2 million and marked down the value of its holdings on collateralised debt obligations (CDOs) by £30.2 million.

Several analysts had predicted that it would write down between £55 million and £86 million for its wholesale assets.

Despite fears that Bradford & Bingley would have problems similar to those of its rival Northern Rock, B&B managed to increase its total lending, by 27 per cent, and lift its savings.

It also said that it remained fully committed to the buy-to-let market, where it retained its one-fifth share of the market, in the face of a five-year high in tenant demand.

Steven Crawshaw, its chief executive, said: "These results demonstrate the strength of our underlying business, which has performed well in a challenging year for the sector.

"With significant funding in place and our savings business continuing to attract new money, we are confident of our ability to be a leading player in the specialist lending market."

Bradford & Bingley said that it had been well placed to deal with the credit crunch problems because of its conservative approach to its funding.

It has also pre-funded its new lending and has enough liquidity to write three months of mortgage business without recourse to wholesale money markets.

The lender increased buy-to-let lending by £4.9 billion (27 per cent) last year.

It also increased the number of self-certified mortgages it offered by 24 per cent (£1.6 billion) but tightened the credit criteria it used for these loans, reducing its share of this market to 8.5 per cent from 9.1 per cent in 2006.

B&B raised its dividend by 5 per cent to 21p.

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