NORTHERN Rock pushed profits through the landmark £0.5bn mark yesterday as it said it expected further robust growth in 2006.

With record profits up by 14.3 per cent, record lending and an increase in market share in 2005, the North-East mortgage lender said it was still hoping for strong growth in 2006, which would mean an increase in jobs in the region.

Last year, the bank announced plans to build a £60m new office complex at Rainton Bridge, near Sunderland, creating 2,500 jobs.

It is also increasing the size of its Gosforth headquarters and, in the long-term, will create another 1,000 jobs there.

The company already employs almost 4,000 staff at its head office and a further 1,000 at its contact centre in Sunderland's Doxford International Business Park.

Northern Rock posted underlying pre-tax profits of £504.6m yesterday, and increased its dividend to shareholders by 13.6 per cent on last year.

Deputy chief executive David Baker said the extra capacity being created at its North-East offices would give it room for continued growth.

He said despite predictions of an economic slowdown at the beginning of last year, the company's business model of keeping costs down had seen it come successfully through a benign economic year.

"Twelve months ago it was all doom and gloom and people were saying the housing market was going to collapse," he said. "But actually, in the second half, housing transactions were much higher.

"The housing market is pretty stable and affordability levels are good because interest rates are so low.

"The fact that we are doing do well is really good news for the North-East, because obviously we are creating jobs, but a lot of people in the region also have shares in Northern Rock."

About a third, or 63,000, of Northern's 191,000 shareholders are in the North-East after gaining shares when it converted from a building society in 1997.

Last year the share price rose from 781.5p to 943p by the end of December - up more than 20 per cent and outperforming both the UK banking sector and the FTSE 100.

Northern also created 467 jobs in the region last year, and donated five per cent - or almost £25m - to its charitable trust, The Northern Rock Foundation.

It said it had benefited from an increased slice of the UK mortgage market, with its share of all mortgage lending rising to 8.1 per cent from 6.8 per cent in 2004.

The company said it had a good start to 2006, with a greater pipeline of future lending than a year ago, at £5bn.

It was helped by a pick-up in the housing market in the final quarter of the year, and said it expected the number of property transactions in 2006 to be broadly similar to the level achieved last year.

The performance of Northern Rock provided a solid start to the banking results season, which continues next month with annual figures from Barclays, Lloyds TSB and Royal Bank of Scotland.

The results from the sector are expected to show combined profits of £34bn, although much of this is generated away from the UK high street.