Bradford & Bingley(BB.)

Bradford & Bingley PLC
22 April 2008




Bradford & Bingley plc

Interim Management Statement


22 April 2008

"The first quarter of 2008 has seen excellent growth in our retail deposit base.
Bradford & Bingley has a strong capital base and has funded its business
activities through 2008 and into 2009.  We have a focused strategy, and a
business model that is adaptable to changing market conditions."

Steven Crawshaw, Group Chief Executive



Funding and liquidity

We continue to fund the bank successfully, and remain funded into 2009, despite
on-going difficulties in the wholesale markets. Our diverse funding sources and
prudent management policies have served us well, and the expected average life
of our mortgage book reflects that of our funding, ensuring our asset and
wholesale liability maturities are well matched.  The £2bn committed funding
facilities we announced at our preliminary results are currently undrawn.
Although the medium-term senior funding markets remain uneconomic for mortgage
lenders, we continue to use the strength of our franchise to attract retail
balances and access secured wholesale money using our high quality mortgage
collateral.


Savings

Savings deposit inflows have continued very strongly during 2008, with an
increase of £1.9bn to date.  Branch savings balances have performed particularly
well following increased focus on savings throughout the network. Our other
distribution channels have also been successful, attracting new funds to the
Group and proving that our well-trusted, established brand is attractive to
savers.


Lending volumes

During the first quarter, we managed business levels lower than the same period
last year as we repriced our mortgage products to deliberately regulate volumes
and widen new business margins. To enhance business quality, we have increased
minimum credit requirements and selectively lowered maximum loan-to-value
levels. As a result, the new business pipeline is below the same period last
year, but in line with our plan for 2008.

Supply has clearly becoming more constrained with the withdrawal of several
competitors from the UK mortgage market. However, demand for buy-to-let remains
robust, with landlords reporting continuing tenant demand and rising rents.


Net interest margin

Margins on loans written in the second half of 2007 were affected by the
emerging liquidity crisis which has impacted the overall Group margin in the
first quarter of 2008.  Holding a larger proportion of our liquidity in gilts is
also affecting the net interest margin.

We have repriced our mortgage products in recent weeks which has widened new
business margins considerably, more than compensating for the higher cost of
funds on these most recent loans. The impact of this wider margin lending should
start to offset the dilution in the second half of the year.


Structured finance portfolio

The structured finance portfolio comprises the bank's investments in PPNs, CDOs,
CLOs and SIVs.  We have disposed of £111m of PPNs at book value.  In the first
quarter, losses on these assets that we believe to be permanent increased by a
further £38m, which was charged to the Income Statement.  This impairment was
confined to the SIVs and in conjunction with disposals and restructuring, has
reduced the value of SIVs to £11m.  Reductions in market values have continued
and the reduction in fair value of derivatives within synthetic CDOs and CLOs
was £44m, which is required to be charged to the Income Statement.  A further
redirection of £43m, after tax, has been recorded in the available for sale
reserve on the Balance Sheet, being the movement on the remainder of the
structured finance portfolio.  Following movement in the fair value of
derivatives, the net exposure to synthetic CDOs is £94m and synthetic CLOs is
£58m.


A more detailed update of the structured finance portfolio is shown in appendix
1.


Credit quality

As we anticipated, arrears levels have continued to rise in the first quarter,
reflecting increasing payment strain. Combined with our current assumption that
house prices will fall, albeit modestly, in 2008 this has resulted in higher
credit impairment provisions. We have significantly increased our management
focus on collections processes and treatment of arrears cases in light of the
tightening credit conditions.


Board changes

Robert Dickie, Group Operations Director, resigned from the Board with effect
from 21 April and will leave Bradford & Bingley on 30 April 2008.  The Board
would like to thank Robert for his contribution to the Group over the past five
years and his considerable achievement in improving our operational capability.


Outlook

Our Savings business continues to perform very well, with a strong start to the
second quarter.  Demand for buy-to-let mortgages remains high with continuing
tenant demand and rising rents. The supply of mortgages to meet this demand is
constrained by the lack of funding generally and the withdrawal of several
competitors from the mortgage market.  We have a focused strategy, and a
business model that helps us to respond quickly to changing conditions.



END



Appendix


Structured finance portfolio at 31 March 2008

                      Total £m         AAA          AA           A          BBB  CCC & Below         Total
             PPNs        442.5         53%         41%          5%           1%            -          100%
   Non synth CDOs         27.3         23%         46%         16%          15%            -          100%
   Synthetic CDOs        183.6         78%          7%          5%          10%            -          100%
   Non synth CLOs        167.9         52%         44%           -           4%            -          100%
   Synthetic CLOs         61.7         81%           -         13%           6%            -          100%
             SIVs         10.8           -           -           -            -         100%          100%
     Credit Funds         67.2           -           -         53%          47%            -          100%
            Total        961.0         54%         29%          9%           7%           1%          100%



Net value of investments containing embedded derivatives

As at 31 March 2008
                                                                              £m

                            Value of synthetic CDO assets                    184
                    Embedded derivative in synthetic CDOs                   (90)
                              Net value of synthetic CDOs                     94



                            Value of synthetic CLO assets                     62
                    Embedded derivative in synthetic CLOs                    (4)
                              Net value of synthetic CLOs                     58



                Fair value of structure finance portfolio                    961
                                      Embedded derivative                   (94)
                     Net value of structured finance port                    867



Note : Embedded derivatives within synthetic CDOs and CLOs are recorded as a
liability on the Balance Sheet



Analysis of investment by geographic region


                         Total £m            UK         Europe            US         Other         Total
              PPNs          442.5           55%            41%            4%             -          100%
    Non synth CDOs           27.3             -            46%           54%             -          100%
    Synthetic CDOs          183.6            2%            28%           70%             -          100%
    Non synth CLOs          167.9             -            64%           36%             -          100%
    Synthetic CLOs           61.7             -            48%           52%             -          100%
              SIVs           10.8           19%            25%           48%            8%          100%
      Credit Funds           67.2            2%            90%            7%            1%          100%
             Total          961.0           26%            46%           27%            1%          100%



Analysis of investment by type of asset


                           Total       Mortgage   Asset Backed      Corporate         Other         Total
                                         Backed     Securities          Loans
                              £m     Securities
              PPNs         442.5              -             4%            80%           16%          100%
    Non synth CDOs          27.3           100%              -              -             -          100%
    Synthetic CDOs         183.6            43%              -            57%             -          100%
    Non synth CLOs         167.9              -              -           100%             -          100%
    Synthetic CLOs          61.7              -              -           100%             -          100%
              SIVs          10.8              -           100%              -             -          100%
      Credit Funds          67.2              -              -            83%           17%          100%
             Total         961.0            11%             3%            78%            8%          100%





Conference call details

Bradford & Bingley will hold a conference call at 0900 hours today with analysts
and investors to discuss the information that is contained within this
statement.



Live dial in number:    +44 (0) 1296 480180
Passcode:                926 452#


48-hr replay dial in:    +44 (0) 207 136 9233
Passcode:                46634073


The replay of the conference call will also be available on our website at
www.bbg.co.uk





Contacts:

Investor Relations                              Media Relations
Katherine Conway                                Simon Moyse, Finsbury
+44 (0) 1274 554928                             +44 (0) 20 7251 3801
Neil Vanham                                     Nickie Aiken, Press Office
+44 (0) 1274 806341                             +44 (0) 20 7067 5645
                                             

       Disclaimer

       This document may contain forward-looking statements with respect 
       to certain plans and current goals and expectations relating to the 
       future financial condition, business performance and results of the
       Bradford & Bingley Group.  By their nature, all forward-looking 
       statements involve risk and uncertainty because they relate to 
       future events and circumstances that are beyond the control of
       the Bradford & Bingley Group including, amongst other things, UK 
       domestic and global economic and business conditions, market related
       risks such as fluctuations in interest rates and exchange rates,
       inflation, deflation, the impact of competition, changes in customer
       preferences, risks concerning borrower credit quality, delays in 
       implementing proposals, the timing, impact and other uncertainties 
       of future acquisitions or other combinations within relevant 
       industries, the policies and actions of regulatory authorities, the
       impact of tax or other legislation and other regulations in the 
       jurisdictions in which the Bradford & Bingley Group and its 
       affiliates operate.  As a result, the Bradford & Bingley Group's 
       actual future financial condition, business performance and results
       may differ materially from the plans, goals, and expectations 
       expressed or implied in these forward looking statements.



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