But residential mortgage arrears increased to 2.32% but losses on residential property reduced to £24m and pre-tax profit increased to £18m.
Total balance sheet provisions increased to £77.1m from £59.1m at the end of last year.
With new mortgage lending totalling £400m the firm is targeting an extra £1bn for the whole of 2010.
All residential mortgage lending was funded entirely by retail savings which rose by £254m to a record level of £7bn.
Ian Ward, chief executive at Leeds, says: ” Our highly efficient, successful, sustainable business model continues to deliver good results, with pre-tax profit increasing by 10%, to £18m, compared to the same period last year.
“As we move into a period of austerity following the worst recession for over 60 years, there are inevitably a very small number of borrowers experiencing difficulties meeting their mortgage repayments and we continued to work with these customers through this period.
“Our business model remains robust and successful as we continue to focus on efficiency, a prudent approach to lending, maintaining very strong levels of capital and high credit ratings. This, combined with delivering good value for money products backed up by excellent service to our members, means that we are in a very good position to deal with the challenging economic outlook for the remainder of 2010 and beyond.”
It attracted 34,000 new members attracted taking total membership to a record level of over 688,000.
Capital and reserves are at £515m even after the buy back of £39m of subordinated debt.
But the wholesale funding ratio reduced to 20% compared to 23% at the end of last year.
Leeds maintained its long term deposit ‘A’ credit ratings, with both Fitch and Moody’s.