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Bradford & Bingley (BB.) – Finals PTP: £126m (£246.7m) Divi: 21p (20p)

And they’re off... the first out of the blocks in what promises to be a heavily scrutinised reporting season for the banks is Bradford & Bingley. By the time you read this Barclays (BARC) will have followed suit and, in a sign of the uncertain picture for the sector, analysts’ estimates on the banking giant’s pre-tax profits for 2008 vary widely, from the highest at more than £7 million to less than £4 million in the most bearish assessment. B&B’s numbers for 2007 were slightly below market expectations and reveal that profits have been cut in half.

Elsewhere, the number of potential bad loans has increased by 42% and another piece of bad news to digest is that the lender has been forced to write-down nearly £150 million on sub-prime exposure – something it said it did not expect to happen only a few weeks ago. In response the stock, almost inevitably, tanked – down some 13% to around 210p.

However, there were some more reassuring signs for investors. Firstly underlying profit was up 5% and there was a modest increase in the dividend.

Secondly the company’s conservative approach to funding means it is better prepared than some for the current crisis in the credit markets. As Alex Potter of Collins Stewart says: ‘Management has previously run a more conservative approach to funding than some UK banks. It has also moved pro-actively to improve short-term funding in these difficult markets. B&B has managed to raise £2.5 billion of funding during the credit crunch and has further committed lines on tap.’

Shares says: This may now have reached its floor but there is not yet sufficient cause to recommend it as a buy.

by: Tom Sieber