British bank Alliance & Leicester, whose plans to merge with Bank of Ireland collapsed a couple of years ago, has reported an 11% fall in annual profits due to higher spending on developing its business.
Pre-tax profits were £396m sterling in 2001, down from £447m in 2000. Analysts had forecast pre-tax profits of up to £395m.
The bank, which converted from a mutual building society, will lose its five year protection from takeovers in April. Analysts expect it to attract a buyer or partner at some stage as it lacks scale on its own to compete in Britain's overpopulated financial services sector.
The bank said there had been no deterioration in asset quality in any business sector and residential mortgage arrears fell by 31% during 2001.
Unlike rival Abbey National, which revealed big write offs on Thursday for its US bond portfolio, Alliance & Leicester said it had no investments in corporate bonds, emerging markets, venture capital funds; or hedge funds.
The bank said the fall in profits reflected spending on developing the group's strategy. It predicted that profits in 2002 would benefit from lower investment than in 2001.
