British mortgage bank Northern Rock today beat analysts' expectations with a 14 percent profit gain in 2005, boosted by strong demand for low-risk residential mortgages.
The bank said it was on track to meet all its strategic targets in terms of asset and profit growth, returns on equity and cost efficiency.
Northern Rock, Britain's eighth-biggest bank, said underlying pre tax profits were £504.6 million (€733 million) last year, up from 441.5 million (€641 million) in 2004.
Northern Rock has withstood a tough UK housing market by keeping costs down and taking remortgage business from its rivals.
The bank reported record gross lending of £26.9 billion (€39 billion) during the year, up 15.2 per cent from 2004, with its market share up to 8.1 per cent from 6.8 per cent.
It said costs as a per cent of underlying income declined to 29.8 percent in 2005 from 29.9 percent a year before.
Northern Rock said it expected asset growth to be near the middle of its 15 to 25 per cent target for the next two or three years and underlying earnings growth to move back to near the middle of its 10 to 20 per cent range.