Speculation that the Bradford & Bingley could be a takeover target for an overseas bank continued today after it announced a modest rise in profits.

The group - which is heavily dependent on the property market - said it was looking forward to a period of stability after a "turbulent" six months.

It announced that shareholders would receive a dividend of 5.5 pence, up from 4.9 pence in the first half of 2002.

But market analysts have continued to earmark the group as a prime target for a takeover bid, particularly from overseas.

Group commercial director Ian Darby said the results, announced on Friday, had been "broadly satisfactory", considering what he called "difficult trading conditions".

Mr Darby admitted the Bradford & Bingley remained "heavily dependent" on the state of the housing market.

But he said that, after a second quarter of the year in which housing transactions dropped 25 per cent, the bank was "comfortable" there would be no major fall-out.

"From what we have seen in the last month or so, the market is starting to look better again and people are putting houses back on the market," he said.

"We think that the market has stabilised and we are a bit more optimistic than we have been.

"We certainly feel a bit more chipper than we did three months ago."

But market analyst Tim Whitehead, head of portfolio services at Leeds stockbrokers Redmayne-Bentley, said he believed Bradford & Bingley remained ripe for a takeover bid.

He said the results had been broadly in line with market expectations, which were revised down after a profit warning from Bradford & Bingley.

But he said he had concerns the group had become too reliant upon the booming buy-to-let market which could witness a major slump if the house market continues to decline.

Bradford & Bingley surrendered its five-year protection against a takeover - given after it gave up its mutual status - when it purchased financial advisory firm Holden Meehan in April.

HSBC had been tipped to make a swoop for Bradford & Bingley, but a bid is more likely from an overseas bank keen to get a foothold in the English property market because that would not incur the involvement of the Competition Commission.

"It could be attractive if a bank, particularly a European outfit, wanted to establish a presence in the UK," said Mr Whitehead.

"It is one of the more likely targets because it is of a reasonable enough size to make a difference to a predator that comes along."

Meanwhile, Mr Darby said that Bradford & Bingley was confident it had a bright future.

"It has been a broadly satisfying six months, but we have much still to achieve in the second half of the year," he said.

"Our principal markets have performed very differently, but we are continuing to change our business.

"We are well down the road to reinventing ourselves and we don't see any reason to move from that strategy. There is certainly plenty for us to play for."