Despite flattening house prices there will be no crash in the property market, the chief executive of Bradford & Bingley said today.

Reporting rising profits for last year, Steven Crawshaw said the specialist lender would continue to grow and drive up profits during 2005.

The B&B reported better than expected pre-tax profits of £280.2m for 2004, up by six per cent on the previous 12 months. Savings balances grew seven per cent to £1.1bn while earnings per share were up eight per cent to 31p and the dividend up four per cent to 17.1p.

Exceptional costs of £174m involved in the disposal of businesses, shaved the profit after tax to £105.3m from £264m in 2003.

Mr Crawshaw, who has carried out a dramatic overhaul of the business over the last 12 months, said: "These are good results. We have started 2005 with a simpler business focused on our core lending and retail divisions. We were delighted with the performance of the core business in 2004 whilst delivering against a demanding strategic agenda.

"Our hard work in 2004 is giving us the opportunity to drive growth from a stronger, healthier platform."

The former building society underwent major structural change during 2004, disposing of five non-core businesses and removing £40m of business costs over the next 18 months.

Lending last year was up seven per cent to £314.3m and lending balances up from £25.9bn to £28.9bn.

"We completed a great deal of ground work changing the shape and size of the group for the better," said Mr Crawshaw. "These are results achieved in a year of major change. Employee numbers are down 60 per cent to 3,000.

"Although we expect to see reduced activity in the housing market, we don't expect a crash because there are a number of strong economic factors.

"In 2005 we will continue to compete and grow profits."

Mr Crawshaw said during 2004 the commercial lending market had been very competitive and the B&B had pulled back from making loans where margins had been compressed in the interests of shareholders.