Bradford and Bingley, the building society which turned into a bank nearly four years ago, today said its specialist mortgage lending had surpassed the level in the old mutual book for the first time.

The company, which employs 1,400 people in Bingley and Crossflatts, said lending in its specialist Mortgage Express business was now £13.6 billion as it posted its results for 2003.

Group commercial director Ian Darby said the results marked a significant point in the company's history as pre-tax profits had grown nine per cent to £263 million.

But he admitted there was still "much work to do" for its independent financial advisory service which had endured a tough 2003. Profits in its distribution sector, including Market Place and estate agency, slumped by more than half to £10.4 million.

"These results mark a major point for us," said Mr Darby. "Over the last three years, we have had to run very fast just to stand still. We are now in a position where we think that a lot of the hard work done by people in the organisation will begin to bear fruit.

"Any building society that demutualises goes through a huge change. It took us 150 years to build up our mortgage book, so to increase the size of our specialist lending to outstrip that is evidence that you can operate a specialist lending strategy."

Group chief executive Christopher Rodrigues said the strong performance in lending would be turned into profit during 2004.

"The group performed well in 2003," he said. "Continued strong lending growth has resulted in a 26 per cent increase in balances."

Earnings per share were up 25 per cent to 32.3 pence and the full year dividend rose 11 per cent to 16.5 pence.