NORTHERN Rock, the building society turned bank, has revealed its second half trading was running in line with expectations, as it showed strong lending growth in all areas of its business.

The Newcastle-based company was announcing a trading update ahead of its full-year results, which are due to be posted on January 31.

Net lending was expected to be roughly double 1999's total and net residential lending about twice what it was expected to achieve based on its size in the market.

The group's Together product - a flexible mortgage, loan and credit card - had proved very attractive and had continued to perform well in comparison with other loans, said the bank.

Full-year pre-tax profits would also be boosted by a £10m one-off tax credit from previously disallowed costs incurred when it converted to a bank in October 1997.

The group's e-commerce operation was also showing ''substantial progress'' and Northern Rock was now focusing on expanding its distribution and reducing transaction costs.

The announcement comes a week after the group revealed its chef executive Leo Finn will step down after almost three years in charge. The bank will draw up a shortlist of candidates by Christmas.