B&B chief rounds on critics

The chief executive of the specialist mortgage bank, Bradford & Bingley, yesterday hit out at rivals who have criticised its "risky" strategy of focusing on buy-to-let and self-certification mortgages.

Yesterday the former building society, which concentrates on these types of lending, reported 2003 profits down 4% to £263m excluding exceptionals, and a 26% increase in managed lending assets to £26bn. The bank had specialist mortgage balances of £14bn compared with £8bn the year before.

Earlier this week the Yorkshire Building Society said self-certification mortgages, which do not require borrowers to prove their incomes, were an "accident waiting to happen". It called for the Financial Services Authority to investigate.

Last year Matt Barrett, the chief executive of Barclays, warned of the risks of rushing into the buy-to-let market.

But Bradford & Bingley chief executive, Christopher Rodrigues, said: "[Mr Barrett] doesn't understand the product and he misses the point that you have got two protections - the tenants' income and the landlord's income. And second, he is one of the larger buy-to-let lenders in the country through the [Barclays-owned] Woolwich."

Barclays has been cutting its exposure to buy-to-let lending while Bradford & Bingley is increasing it, and now has 25% of the market. Mr Rodrigues argues that the boom in this type of mortgage is due to professional landlords choosing new methods of finance rather than amateur investors jumping into an overheated market.

B&B also defended its focus on self-certification mortgages, as it argues that it carries out extensive credit checks on borrowers. "There is a slightly higher risk in self certification mortgages, and you charge more for it," said Mr Rodrigues. "But it is not materially more risky if you do the underwriting successfully. You have to be selective."

B&B reported a recovery in its estate agency business in the second half after selling fewer houses in the spring. The bank's shares fell 4% to 313.25p yesterday.

Manchester Building Society, a small operator offering cheap deals for limited periods, yesterday reported record new lending at £102m, up 30% on the previous year.