ALLIANCE & Leicester yesterday indicated it may have to cut jobs in order to keep down costs as it reported a 12 per cent increase in profits for the past half-year.

However, the company said those working in branches would not be affected.

A spokesman said: "Those working in customer-facing roles will not be affected."

Shares in the bank rose three per cent after the firm reported pre-tax profits for the six months to June 30 up to £233m and at the top end of analysts' expectations.

The group is in the middle of a cost-cutting programme to save £20m this year and to reduce its cost base by £100m by the end of next year.

Part of its cost-cutting programme has involved reducing staff numbers by 500, of whom more than 300 left through voluntary redundancy, with the remainder going by natural wastage, at the end of last year and the beginning of this year. This action brings staff numbers down to 8,500.

The group acknowledged that staff would be concerned by this announcement and said it was in talks with employees