British mortgage bank Alliance & Leicester said yesterday its performance this year was in line with market expectations as it increased revenue growth amid a home loan boom.

Britain's eighth-biggest bank boosted revenue by 5.8 per cent in the first nine months of this year compared with 3.9 per cent a year earlier, excluding credit card income, the bank said in a statement.

British banks have benefited from a mortgage boom with interest rates at their lowest since the 1950s.

Alliance & Leicester has been wary of large loans in London and has stayed clear of mortgages for people renting out homes while rivals such as Bradford & Bingley and Northern Rock have cashed in on those profitable loans.

"It's quite a good story, but it's slightly expensive against its peer group," said Mr James Eden, an analyst at Commerzbank Securities. "The question is how much do people want to pay to sleep well at night."

Gross mortgage lending increased 22 per cent to £5.6 billion (€8.34 billion) in the first nine months of 2003, and gross unsecured personal lending rose 48 per cent to £1.6 billion, the bank said. Credit quality is strong in all its businesses, it said.

Analysts' consensus for full-year pre-tax profit is £514 million, up from £468 million in 2002.

The bank said it was on track to achieve its earnings-per-share growth target of at least 10 per cent this year.

Alliance & Leicester is boosting earnings per share by buying back stock. It bought and cancelled £191 million of shares this year. - (Reuters)