A BUOYANT remortgaging market has helped Northern Rock stay on course to achieve a 20 per cent growth in lending.

Despite a slowing in the number of first-time buyers looking for mortgages, the Newcastle-based bank said net residential lending was up by more than 28 per cent.

The lender also expects to net £7.7m pre-tax profit from the transfer of its credit card business to The Co-operative Bank.

The deal, which is expected to be completed shortly, will see a portfolio of 90,000 accounts with outstanding balances of £217m passed over.

Northern Rock will still offer branded credit cards to its customers, but the risk element of credit agreements will pass to The Co-operative.

Adam Applegarth, chief executive, said: "Northern Rock's lending performance in the first five months of 2003 has been very strong.

"We are building on the excellent progress we made in 2002 and, as the housing market slows, I still expect Northern Rock to achieve its strategic targets and to continue to deliver strong growth in high quality, low risk assets."