British bank Alliance & Leicester reported a 10% rise in underlying first-half profits on Friday, just ahead of expectations as it boosted its efficiency by attracting more Internet customers.
Britain's seventh-biggest listed bank said its core operating profit rose to 295 million pounds ($604.8 million), up from 268 million in the first half of 2006 and 2 million pounds ahead of the average forecast given in a company poll of analysts.
The bank said its costs as a percentage of income improved to 51.8% in the first half, from 54.8% a year earlier, as operating expenses held flat from a year ago while revenues grew.
The bank said it expects the rate of growth in both U.K. commercial lending and mortgage markets to slow during the second half and for the unsecured lending market to be lower in 2007 than in 2006 after five interest rate rises in less than a year.
A&L said its unsecured personal loans jumped 22% to 1.4 billion pounds in the first half, representing a market share of 7.6%.
But its said bad debts on unsecured loans was lower than a year ago and the proportion of mortgages in arrears was also lower.
It said it had seen an increase in customer complaints regarding bank charges and it had made a provision against anticipated refunds, but it "is not significant in the context of the group's results".
A&L's mortgage net lending was 2.2 billion pounds in the first half, an estimated market share of 4.2%, above its traditional share of 3.6%.
The bank said consumers continued to switch to direct channels. It said 41% of sales of its "core 4" products -- loans, current accounts, mortgages and savings -- were generated via the Internet in the first half, up from 35% a year ago, fuelled by a jump in current account Internet openings.