Amid a “highly competitive market”, the bank said it had focused on risk management, customer service and retention within its mortgage book.
The lender refinanced 55% of retained mortgage loans online, an increase of seven percentage points year-on-year, its quarterly results showed.
But the bank continues to lose SVR customers as they are tempted to competitive fixed-rates, with a net reduction of £5.5bn expected in 2018 – similar to 2017.
Credit impairment losses were also up 10%, which the bank said reflected a number of charges and lower releases across portfolios.
In the first nine months of 2018, the lender increased gross lending to £21.3bn, from £18.3bn in the same period last year.
But the fall in income, as well as higher regulatory and risk costs, were behind a 13% drop in UK profits before tax to £1.37bn in the nine months to the end of September, from £1.56bn in the same period last year.
Weaker buyer demand
The lender said weaker buyer demand and subdued house price growth seen so far in 2018 was likely to continue for the rest of the year and predicted the mortgage market to continue to grow at around 3%.
Nathan Bostock, chief executive said: “In a highly competitive market, we continued to support customers and have grown net mortgage lending while maintaining our rigorous underwriting approach.
“In our corporate business, we have further reduced commercial real estate exposure while focusing on lending to other trading business customers.
“Our results reflect competitive income pressures and higher regulatory project costs, as well as the impact of ring-fence transfers.
“Our efficiency initiatives have reduced cost growth in each quarter this year.”
“With our prudent approach to risk and controlled business growth, our purpose – to help people and businesses prosper – is never more important than in a period of economic uncertainty,” he added.