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Northern Rock lifts growth target on strong H1 results

Northern Rock, Britain's eighth largest listed bank, saw first half profits rise by 14% to GBP273.7 million, following a strong performance across the group.

The Newcastle-based lender said it will now raise its full-year profit growth target from 15% to 20%, as strong lending volumes continued in the first half of 2006, creating underlying total assets of GBP88 billion, an increase of 24% compared with June 30, 2005.

Northern Rock also continued its strong performance in retail funding it has seen over the last few years, resulting in net inflows of GBP1.7 billion.

Underlying profit attributable to shareholders increased by 16% to GBP173.5 million compared with the first half of last year, while net income rose to GBP187.8 million or 44.7 pence a share, from a restated GBP163.7 million, or 39.3 pence a share, in 2005.

Northern Rock has had a good first half in 2006. We achieved all of our strategic targets, with our performance very much in line with the guidance we gave at the beginning of the year, said Adam Applegarth, Northern Rock’s chief executive.

In addition, we have put in place some key building blocks for the longer term, including a preference share issue, a second Whinstone transaction as well as bringing onstream major new IT systems.