Abbey National has reported a 2% fall in pre-tax profits to �1.94bn for 2001, in line with analysts' expectations.

Turnover rose 4% to �4.3bn during the period.

Mark Pain, now the bank's new managing director of wholesale banking but until recently chief financial officer, told BBC News Online that the performance had been resilient, with record levels of mortgage lending and retail savings.

But looking ahead, weak economic growth and low inflation would make times difficult for the banking sector.

Enron exposure

Abbey National's profits were hit by a �256m write-off in its business banking unit, in part due to its previously announced �115m exposure to the failed US energy trading giant Enron.

Abbey narrowly escaped an acquisition attempt by Lloyds TSB last year.

For the moment, the bank does not see the need to merge with another financial institution, said Mr Pain.

Though if growth could be achieved more efficiently by doing so and if the right deal came up at the right price, the bank would consider it, Mr Pain added.