The bank reported that cost-cutting measures had enabled the company to improve profits, with more customers choosing to bank online and over the telephone.
A&L stated that its core operating profit was up by just 1.5 per cent, from Â£540 million ($939 million) in the previous year to Â£548 million ($953 million) in 2005.
Mortgage business rose for the bank to Â£4.9 billion ($8.5 billion) last year, giving A&L a market share of 5.4 per cent, compared with just 2.4 per cent in 2004. However, losses from bad debts rose steeply in 2005, from Â£46 million ($80 million) in 2004 to Â£74 million ($128.7 million) last year.
The company announced total income of Â£1.39 billion ($2.4 billion) for last year, with sluggish revenue growth boosting it marginally from Â£1.37 billion ($2.38 billion) in 2004.
A&L chief executive, Richard Pym, commented: "This is an exciting time for Alliance & Leicester and I believe the bank has never been in better shape. We have a sustainable business model to deliver future revenue growth and efficiency improvements."