Abbey has avoided the worst of the credit crunch, according to first quarter figures from the Santander-owned lender.

Statutory profit before tax from continuing operations and trading profit before tax for the first quarter were well ahead of the same period in 2007, according to Abbey.

The bank improved its mortgage market share to 15.9 per cent over the period, driven by higher gross lending and better retention.

Abbey said the higher lending was down to a contraction in the sub-prime sector, where the bank has little exposure.

Chief executive Antonio Horta-Osorio said: “Abbey has been taking a balanced approach in managing its market share and profitability, for several quarters now.

“From this platform, we have been able to capitalise on the recent trends in the mortgage market, increasing both volume and margin together with a prudent risk criteria, consistent with Santander’s traditional standards.

“We continue to benefit from our focus on the prime residential mortgage market, and only three per cent of our new business is at a loan-to-value (LTV) of greater than 90 per cent.”

Yesterday, Abbey reduced its maximum LTV to 90 per cent from 95 per cent, further tightening its mortgage criteria.

Abbey added the increased market share is being funded by increased customer deposits and redirecting funding from short-term markets operations rather than relying on the wholesale money markets.

The Building Societies Association (BSA) said today that the key to surviving the credit crunch is to source the majority of cash inflows from deposits.

“With building societies receiving some 70 per cent of their funding from the retail market, their continuing strength in attracting savings has meant that the problems in the wholesale markets have had less of an impact on building societies than on some competitors who are more dependent on wholesale funding,” the BSA said in a statement.