Northern Rock remains upbeat about its prospects for 2004

The UK lender said full-year pre-tax profits came in at �386.8m ($707.9m), compared with �326.2 a year ago.

Northern Rock said net lending rose 27.1%, to �8.5bn, during the 12 months to 31 December.

Chief executive Adam Applegarth also said the bank might buy the mortgage books of UK rivals Egg and Standard Life if they came up for sale.

On Monday, insurance giant Prudential - which owns 79% of Egg - said it had been approached by several buyers for the loss making online bank.

Newcastle-upon-Tyne-based Northern Rock said continuing low levels of unemployment, combined with a limited supply of new housing, would offset any slowdown in the property market in 2004.