Latest Results

INTERIM MANAGEMENT STATEMENT

13 May 2008

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Alliance & Leicester Interim Management Statement

Alliance & Leicester will be holding a conference call for analysts and investors at 9.00am today, to update the market on its 2008 trading. This Interim Management Statement sets out the main information being provided in the conference call.

Summary

·         Core operating profit excluding Treasury in the first four months of 2008 was similar to the same period in 2007. Treasury's results include the impact of the strategic funding costs and liquidity holding costs previously announced, as well as impairment and fair value changes of certain treasury assets (Note 1).

·         During the first four months of 2008, a £53m reduction in the fair value of certain treasury assets and a £139m impairment loss charge relating to certain treasury assets were recognised in the Income Statement (Note 2). Strategic funding costs and liquidity holding costs incurred in the first four months of 2008 were £49m.

·         Overall there has been no deterioration in the asset quality of our customer loans and advances. Asset quality remains strong and better than industry averages.

·         The Group net interest margin is on track to average around 1% during 2008.

·         Core operating expenses in the first half of 2008 are expected to be slightly lower than in the same period in 2007 (Note 3).

·         We have continued to extend our funding, and have now pre-funded our medium term wholesale funding maturities, commercial paper and certificates of deposit into the second quarter of 2009.

Comment from David Bennett, Group Chief Executive

“Alliance & Leicester has made good progress during the first four months of 2008. Core operating profit excluding Treasury was similar to the same period in 2007, although volatility in the financial markets has led to a further reduction in the value of certain treasury assets.

“The asset quality of our customer loans continues to be strong, with mortgage arrears running at less than half the Council of Mortgage Lenders’ average.

“Our funding position is also strong, with medium term funds secured into the second quarter of 2009, and we continue to have a strong capital base.”

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