High Street bank reveals record profit

Northern Rock today revealed that it made record profits in 2004 - the best year ever for the high street banks.

Britain's seventh biggest bank said its pre-tax profits grew 13 per cent to £431.2 million. It forecast a further 15 per cent growth in 2005.

The figures are the first in a series of expected record profit announcements from Britain's big banks in the next few weeks. Total bank profits last year are thought to have exceeded £33 billion - equivalent to more than £1,000 a second. The forecast figures have already triggered outrage from consumer groups which accuse the banks of profiteering.

Northern Rock's chief executive Adam Applegarth said the profits were fuelled by "particularly buoyant" mortgage lending. The bank is seen as one of the more aggressive lenders, offering home loans of up to 125per cent of a property's value.

The nine major banks are set to reveal that the surge in household borrowing through mortgages, personal loans and credit cards is largely behind the bonanza. Consumer groups say the banks have been rippingoff customers while providing a dismal level of service.

Much of the increase has come through overdraft and other fees on current accounts and high interest on credit cards. Barclaycard, a subsidiary of Barclays, is alone expected to contribute profits of about ?800 million. The profits will range from about ?270 million at Bradford & Bingley to as much as ?9.5 billion at HSBC. The results cover the year that saw Britain's consumer boom reach its peak with personal borrowing passing the ?1 trillion mark.

Eddie Weatherill, chief executive of the Independent Banking Advisory Service, said: "Nobody minds the banks making a good profit, but they have exceeded that level many times over. We think the only way the consumer is going to get their money back is to inflict a windfall tax on the banks of somewhere between £5 billion and £10 billion."

A spokesman for the British Bankers' Association said: "The profits can look huge but they are more down to lowering the cost of operations than higher prices and much of it comes from overseas and corporate operations."