Northern Rock has stuck by its targets for the year, despite evidence of a slowdown in the housing market.
In a trading update, the group said it was pleased that its pipeline of agreed new business remained consistent with the start of the year.
Northern also said it was "comfortable" with current market expectations for annual profits in the region of £475 million, a gain of ten per cent on a year earlier and within the company's targeted range of between ten per cent and 20 per cent.
The improved performance came despite Newcastle-based Northern forecasting a fall in the overall gross mortgage market, which it expected to decline to £260 billion in 2005, down from the record £291 billion seen in 2004.
The forecast of £260 billion is slightly lower than the range of £ 265 billion to £270 billion predicted by the bank at the start of this year.
However, Northern said the lower figure, reflecting higher mortgage costs and a slowdown in consumer spending, was "still sufficient" for it to meet lending targets.
The company said it was starting the second quarter of the year with a loan pipeline of agreed business of £5 billion, seven per cent higher than a year earlier and broadly in line with the £5.1 billion seen at the start of 2005.
The residential lending pipeline of £4.5 billion represents a gain of six per cent on a year earlier and contrasts with a 17 per cent fall in gross awards for the industry. Strong levels of customer retention ensured net lending rose 54 per cent on a year ago, which was Northern's quietest quarter of 2004.
In January, Northern announced pretax profits of £431.2 million, a record after beating the £386.8 million reported a year ago.