British mortgage bank Northern Rock said it expected to hit profit forecasts for 2003 after record lending in the first quarter.
The UK bank also said it was set for continued strong lending in the second quarter though it expected house price inflation, which has been boosted by record low interest rates, to return to more long-term sustainable levels.
'Operating performance in the first quarter of the year continues to be very strong,' Chief Executive Adam Applegarth said in a trading statement. 'It is in line with our operational expectations and strategic objectives and builds on the excellent progress we made in 2002,' he added.
In January, the bank had reported an 18% increase in underlying 2002 pre-tax profit of £326.2m sterling and was upbeat on its prospects despite a slowdown in its main housing loan market.
Mortgage lenders have gorged off the booming housing market, which has been boosted by interest rates at 48-year lows. Low borrowing costs have prompted a house-buying orgy with prices jumping by more than 25% in the last year, raising fears that the bubble is close to bursting.
But Northern Rock said economic fundamentals, such as GDP growth of around 2% in 2003 and relatively low unemployment, would keep interest rates under control. The lender said it was well prepared to deal with a slowing mortgage market.
'A combination of being relatively small, having very low unit costs and good retention of existing customers means Northern Rock is confident of continuing to achieve its lending targets,' it said. The bank also said that it was comfortable with analysts' forecasts of 2003 pre-tax profit of £351.8-376.7m.
