Abbey set aside £373m last year so Scottish Mutual and Scottish Provident can meet the FSA's yet to be published solvency regulations for life companies, with overall losses of £686m compared with £947m in 2002.
Abbey says the solvency regime will have a negative affect on its life companies and admits it is possible that additional capital will need to be injected once the FSA makes its final position clear although it says this would be modest in the context of the cash injections made in the last two years.
Net new mortgage lending for Abbey rose by 40 per cent to £9.4bn from £6.7bn, making a market share of 9.9 per cent. Investment product sales fell by 43 per cent to £184m from £322m but protection sales rose by 12 per cent to £125m from £112m.
Chief executive Luqman Arnold says: “Given the upheaval that the business has had to cope with, the trading results reported today are resilient and encouraging for the future.”