Directors' report

Business review - Our strategy

Strong, diversified funding base

Diversified funding, including a strong retail savings business, has been a key component of Bradford & Bingley's strategy for many years. The second half of 2007 demonstrated the importance of this approach: we remained able to fund the business in what have been very challenging market conditions.

Unlike many lenders active in our chosen markets, a large proportion of our funding comes from customer deposits, which we distribute through our branch network and via our online, telephone and offshore channels. These deposits provide access to safe and stable funding at an average cost that is below wholesale rates.

A particular highlight for 2007 has been our joint-venture with ASDA which enables us to reach some 11 million ASDA customers with competitive products, providing significant further growth opportunities for our savings business. Indeed, savings market development will continue to be a key strategic theme for Bradford & Bingley for 2008 and beyond as we explore further new product segments and distribution channels. Our funding platform received a significant test during the second half of 2007 and our ability to raise £2.5bn from private transactions in a six week period (when the wholesale markets were effectively closed) is testament to the skill and expertise of our wholesale market operations.