HBOS subsidiary Birmingham Midshires said it had produced good results in a challenging market in 2007.
The Wolverhampton-based company, which would be a top ten mortgage lender and savings provider in its own right, said its retail deposits rose by more than £3 billion to £16 billion in 2007 while its loan book grew on a net basis by £4.4 billion to £44 billion.
BM managing director Nigel Stockton said the operation had benefited from the "flight to safety" by depositers following the run on Northern Rock last year.
On the loans side of the balance sheet, BM, as a strongly capitalised business, had not suffered any of the problems encountered by lenders who raise funds from the wholesale markets.
But in an uncertain economic climate, BM was ratcheting up its lending criteria, said Mr Stockton.
"You will see us cutting our maximum loan to value from 97 per cent to 85, for instance, and we will see a rise in repossessions and arrears this year, that is no great secret," he added.
BM was recently among a clutch of lenders to scrap its 125 per cent mortgage, but Mr Stockton stressed there was no plan to withdraw totally from any segment of the mortgage market.
It remains, for example, the country's biggest buy-to-let lender whose customers, predominantly landlords with up to three properties, are proving resilient to the housing slowdown.
"These results demonstrate the success that we've had throughout 2007 for what has been a challenging market at times," Mr Stockton added.
With 1,800 people working at its base at Pendeford, BM is Wolverhampton's biggest private employer.