The company warned that its first-half, pre-tax profits would be below the �135m ($225m) it reported in same period of last year.

In a statement, B&B said "the drop in transaction volumes, in both the housing and investment markets" had adversely affected its performance.

The British Bankers' Association reported this week that the number of mortgage loans taken out in May had fallen by almost a quarter compared with last year.

As a lender, B&B focuses on specialist mortgages such as buy-to-let loans. It also sells investment products.

'Selective lending'

Nevertheless, the company said that the credit quality in all its mortgage portfolios continued to improve.

"Our business performance has been underpinned by record growth in quality selective lending and increased mortgage broking revenues," said chief executive Christopher Rodrigues.

"These have largely offset the impact of a slow housing market and a decline in demand for investment products."

Overall, B&B's lending business has continued to increase its assets and market share, the statement said.

The acquisition of new loan portfolios from a subsidiary of General Motors, GMAC-RFC, has helped to supplement its organic growth.