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Northern Rock reports lower losses

Northern Rock reports lower losses

Category: Banking

Updated: 03/08/2011
First Published: 03/08/2011

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Northern Rock PLC has announced that losses at the nationalised lender fell in the first six months of 2011.

Pre-tax losses totalled £68.5 million in the first six months of the year, compared with £142.6 million in the same period last year.

It has improved its performance partly as a result of higher interest being received from its loan book, especially from mortgages.

The bank said the results showed that it is continuing to make progress despite tough trading conditions.

It said that it expects to make a loss over the rest of 2011, but is looking to return to growth in the second half of next year.

Northern Rock PLC is currently up for sale, after the bank was split in two last year.

The deadline for interested parties to make bids came to an end last week, with Virgin rumoured to be in the running for the bank.

Yorkshire Building Society was linked with a bid and is set to acquire Norwich and Peterborough Building Society and the mortgage and sales book of Egg Banking, but ruled itself out.

"We are working closely with UK Financial Investments and our advisers to explore the options for a sale of Northern Rock, at the right time and in the best interests of taxpayers," said Ron Sandler, executive chairman.

"We are pleased with the level of interest we have received and will continue to explore the sale option over the coming months."

Northern Rock Asset Management – which holds the bank's more toxic loans and assets – will not be sold.

Lending fell from £2 billion to £1.5 billion during the first half of the year, as the bank continues to take a conservative approach.

The average loan-to-value of new lending in the period was 69%, although this was up from 62% in the first half of 2010.

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