British mortgage bank Alliance & Leicester has reported a 6 per cent increase in annual profit today in line with expectations.
Pretax profit increased to £556 million sterling, excluding a £52 million one-time gain, the company said.
However, the bank also said it expected slower growth in its core markets and tightening profit margins.
Analysts had forecast profit of £554 million, with a range of £567 million to £548 million. Revenue rose 2.2 per cent to £926 million, but the underlying increase was 2.7 per cent, achieving the bank's target of accelerated growth, it said.
Gross mortgage lending increased 7 per cent to £8.7 billion. The former building society has been cautious on mortgage lending during Britain's recent house-price boom, avoiding lending large multiples of income and refusing to join the booming, profitable buy-to-let market.
Analysts are concerned that Alliance & Leicester will struggle to boost revenue amid increased mortgage competition, slowing consumer borrowing and tightening profit margins.
The bank's net interest margin, a key measure of lending profitability, fell to 1.52 per cent from 1.79 per cent a year earlier, though the decline was slightly less than the bank predicted in December.