Alliance & Leicester, the former building society, said it would focus on becoming the friend of small businesses.

This as the company unveiled a two per cent rise in interim pre-tax profits.

For the six months to June 30, pre-tax profits came in at £251.6 million, compared with £247 million last time.

After stripping out the £15 million cost of developing its internet bank and the £10 million cost of its share buy-back programme, Alliance & Leicester said pre-tax profit growth was seven per cent.

But executive chairman John Windeler warned market conditions in the general banking sector were going to be pretty hard for the forseeable future.

He said: "Trading conditions are going to continue to be tough, and could get even tougher."

Commenting on the bank's small business strategy, he said it was ideally placed to become a key player in the small business market through its links with the Girobank and the Post Office.

He added: "We are viewing the expansion of the small business market as a key component of our strategy."

The bank currently has around a two per cent to three per cent share of the small business market, and is aiming to increase this to a "much larger" stake.

Mr Windeler ruled out the option of putting small business advisers in every branch, insisting the focus would be on offering small businesses services over the internet as well through Post Offices.

The bank is currently developing a service to allow small businesses to build their own websites to sell their products over the internet.

It currently manages about 130,000 small businesses.

The bank will pay an interim dividend to shareholders of 10.7p, up 13 per cent from 9.5p last time.