Northern Rock, one of the smallest UK mortgage banks, has reported a 14.1% rise in first half profits, helped by record lending to home buyers. Pre-tax profits in the six months to June 30, 2001 rose to £139.6 million from £122.4 million in the same period last year.
The figure was at the top end of the range of analyst expectations of between £134-139 million.
Despite its small size, Northern Rock has carved out a highly successful niche in the UK mortgage market with a focused, low-cost strategy.
Chief Executive Adam Applegarth said that Northern Rock's Irish funding arm had performed well and in the first half increased its balances by 132 million euro to 478 million euro.
The Newcastle-based bank launched its Irish retail funding operation in Dublin in November 1999. It now has over 11,000 customers who operate their accounts by post, telephone or over the Internet.
Mr Applegarth said the bank had met all its targets in the first half. 'This resulted in falling unit costs underpinned by strong growth in our lending and profits,' he said.
Looking ahead, the bank said it expected the UK economy to soften, but anticipated only a slight slowing in the mortgage market. 'Gross lending is expected to remain healthy, supported by re-mortgaging which will enable us to achieve our lending targets.'
The tenth largest listed UK bank by market value increased net mortgage lending by 16.3% to £2.3 billion, giving it a share of UK net mortgage lending of 7.3%.
Bad debt provisions rose to £11.6 million in the first half, from £8.4 million in the comparable period last year.
The bank said the increase reflected the growth in personal unsecured lending, which was offset by low residential arrears and house price inflation.
Northern Rock, facing an increasingly cut-throat mortgage market, said a more stable trend for margins seen in 2000 continued in the first half.
