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A&L stuck the good news in the first line of their interim statement - core operating profit in the first four months of the year was “similar” to the same period in 2007. Trouble is, no one cared about core operating profit when they saw what came next.

The bank has been shifting its position since last summer to avoid ending up as the next UK lender to get Crocked. That has meant a squeeze on new mortgage lending and a fall in balances. Unsecured lending has also fallen by about a third year on year.

Collins Stewart’s Alex Potter points out that with revenue growth looking weak, if positive, maintaining profits relies on controlling costs in line. Impressive to have managed that so far - but how long can it last?

Hard to see also how A&L’s rosy impairments outlook can endure, with the numbers of loans more than three months in arrears sitting at 0.57 per cent, less than half the CML average.

Another worrying Crock legacy for A&L is its cost of funding. The bank is holding greater liquidity than previously, and is suffering higher funding costs as a result of more pricey wholesale deals struck to shore up A&L’s position in the second half of last year. The end result is costs estimated at £150m for the year, against £23m in 2007. And with funding arrangements in place for about two years it all points to reduced profitability for the foreseeable.

But the final sting for analysts on Tuesday was the £192m hit that A&L took on its treasury assets.

The total - with another £198m of fair value losses recognised post-tax in the reserves - was higher than analysts’ expected. The A&L marks have come out below where the apparently super-cautious valuations from RBS would have suggested, notes Potter - and don’t provide comfort that credit market improvements in April will filter through yet to banks’ earnings.

With A&L sitting on a structured credit book of £13.8bn (details below), there’s ample scope too for more charges to come. In addition, there’s £718m of ABD, CDOs and CLOs within A&L’s conduit, currently funded by a loan from the bank, on which it took a £3.4m charge.

A&L shares, which have fallen about 60 per cent since last May’s high, fell another 7 per cent on Tuesday. The last bit of good news for the stock was in January when talk of a takeover by Santander resurfaced. Lucky we opted not to hold our breath.

Related links
A&L writedowns bigger than expected - FT.com
That A&L flurry in full - FT Alphaville, January 08
Consortium of banks lends A&L £10bn - FT Alphaville, November 07