Standard Life Bank has moved into profit a year ahead of schedule after making £4.6m last year.
City analysts have speculated that parent company Standard Life may have to sell off the bank and its Standard Life Healthcare subsidiary if it wants to maintain its mutuality.
In the year to November 16, Standard Life Bank's mortgages under management rose to £8.7bn from £7.2bn the previous year while gross mortgage lending rose to £3.4bn from £3.1bn.
The bank says business quality has improved over the past year, with mortgage arrears standing at 0.08 per cent, less than 10 per cent of the industry average. Its retail savings balance fell to £4.6bn from £4.8bn.
Chief executive Anne Gunther says: “2003 was a great year for Standard Life Bank. We achieved profit for the first time, one year ahead of plan. We moved beyond the start-up phase and are now a mature and successful business.”
Chairman Brian Stewart says: “The bank is very much at the heart of the growth and development of the group.”
One City analyst says the subsidiaries could only stay in the group if Standard was committed to demutualisation. He questions the place of both the bank and SLHC in the mutual organisation, saying it is possible in the present climate that policyholders may take issue with their money being used in such ventures.