Britannia Building Society reported a five per cent increase in interim profits a day after finalising its £150 million takeover and remutualisation of the Bristol & West savings business and branch network.

The Staffordshire-based society, the country's second biggest mutual behind Nationwide, said profits before tax and membership benefits for the six months to 30 June rose to £72.6 million.

Britannia has grown by a third following the acquisition of Bristol & West from Bank of Ireland, which has retained the former building society's mortgage book.

The deal has given it 850,000 new savers at 97 new branches, mainly in areas of the country in it was previously not well represented.

A total of 32 Bristol & West or Britannia branches will close in towns where the two were close neighbours.

The combined business has three million members, assets of £ 30 billion and 284 branches.

Britannia chief executive Neville Richardson said yesterday: "This is a very exciting time for us.

"Strategic deals like this do not come along very often and it will significantly increase the size and scope of Britannia's business, delivering additional opportunities for growth." The deal was funded partly by the issuing of £200 million of permanent interest-bearing shares, or Pibs, the offer of which was oversubscribed on the part of institutional investors.

Mr Richardson said the society had anticipated and planned for the downturn in the housing market by reducing its lending targets. Mortgage completions were on target at more than £2 billion at the half-way stage and " reasonably buoyant" application levels means the full-year plan is likely to be exceeded.

Britannia is among the more cautious mortgage lenders and just three per cent of its advances during the first six months represented a loan to value of more 90 per cent while the average LTV was just 56.6 per cent.