![image: [ Abbey National: profits up ]](/olmedia/60000/images/_60262_abbey300.GIF)
However, after one-off costs of £145m the increase was cut back to just 9.6%.
The exceptional charge was related to income from leasing and life assurance arising from changes in corporation tax made in last year's Budget.
The figures, which were in line with City forecasts, showed only a 5% increase in profits from UK retail banking to £722m from £685m in 1996.
In contrast, general insurance posted a whopping 63% increase in profits to £104m from £64m.
Life assurance rose 19% to £165m while its diverse investment business, known as treasury and offshore, gained 19% to £308m.
Deputy chief executive Charles toner said: "Everybody is being competitive on mortgage business. We are all competing hard and discounting hard.
"But we are still a major player. We have 14% of the market and are number two."
He said the growing strength of the diversified businesses would make it strong enough to continue operating alone, safeguarding it from a merger or acquisition.
He added that the company was still in the market to buy a life insurer "if it was appropriate" but that prices were too high at the moment.
The company increased the dividend by 18% to a total of 30.7p.
Abbey National raises mortage rates
(11 Nov 97 | Business)
The BBC is not responsible for the content of external internet sites.
Seven hit euro targets
Clinton appeals: 'No net taxes'
Silver Seraph rolls into limelight
Finance ministers discuss ditching dollar
House prices 'near 1980s record'
Last chance to spend old 50ps
Chunnel link deadline extended
Jobs boost for Wearside
Call centres: the new sweatshops of Britain?
Irish turning tables in boardrooms coup
The battle for Diana's lucrative legacy
(From Special Report)
E-commerce - the online shopping boom
Does size matter?
(From Despatches)
Argos attacks GUS offer
New pit could create 300 jobs