Mortgage bank Northern Rock has reported an 18 per cent rise in annual profits, at the top end of forecasts, saying its business is in good shape despite a slowdown in its main markets.
Pre-tax profits before exceptional items rose to £326.2 million in the year to end December from £276.5 million a year ago, helped by record low interest rates in Britain that have spurred consumers to take out home loans.
Investors have viewed mortgage banks like Northern Rock, one of the smaller banks in the FTSE 100, as a relatively safe haven amid market volatility.
British property prices soared last year despite a stock market slump. Although house price inflation is showing signs of a slowdown, most analysts do not expect a property market crash like the one in the 1990s which hit banks hard.
Northern Rock said today that while the housing market was set to cool off in 2003, it did not see a sharp reduction in house prices. It added it had not seen any deterioration in its asset quality.
Northern Rock shares, one of the best performing British bank stocks in 2002, closed down 2.9 per cent at 568p yesterday. It has outperformed the DJ Stoxx European bank sector by about 17 per cent over the last year.