The lender blamed the credit crunch for the fall and as a result of the announcement shares in the organisation fell 12 per cent.
However, B&B admitted that its underlying profits would have shown an increase of 5 per cent, to £351.6 million, if it had ignored ‘unusual and extreme external events’.
The bank’s results also showed that borrowers who had stacked up arrears of over three months had increased by over 40 per cent, to 6,170 borrowers.
However, the lender reiterated that it would not suffer a similar fate to that of Northern Rock, and confirmed that it had £2 billion worth of agreed credit and that 60 per cent of its loans were funded by customer deposits.
Commenting on the results, a B&B spokesperson said: “There is no denying that today’s market circumstances present the mortgage industry with a unique set of challenges and opportunities.”
However, they added: “We believe the fundamentals that drive our specialist markets remain strong, and expect the buy-to-let market to continue to grow at a faster rate than the mainstream mortgage market.”
Alan Lakey, senior partner at Highclere Financial Services, said the announcement from B&B highlighted a key weakness in the capitalist system – that profits must always increase.
He expained: “It certainly wouldn’t stop me from recommending the lender if everything else was okay. If the concern is financial stability then owing B&B money is not a problem.
"The real problem – as Northern Rock investors discovered late last year – is when an ailing lending organisation has your money.
Lakey added: “It also highlights one of the weaknesses of the capitalist system – the mindset that profits must surge ever upwards. The B&B profits are still very healthy. Clearly the firm is not trading at a loss.”
