subject: Northern Rock figures mark return to profit [print this page] Northern Rock Asset Management (NRAM), previously branded as the "bad bank" section of the former Northern Rock business, has reported it has returned to profit.
NRAM now services the majority of the bank's old mortgages and unsecured loans.
According to a report, pre-tax profit hit 349.7m for the half of the year to 30 June 2010, compared to the 724.2m loss that was made in the same period in 2009.
However, the "good bank" part - Northern Rock PLC, which holds savings account deposits and new loans, made a pre-tax loss of 142.6m.
The recent figures mark the first set of results since the bank was split into two in January.
NRAM said it was "continuing to make good progress".
Chief executive Gary Hoffman said: "The company is continuing to show improving underlying profitability and 90% of the mortgage book remains fully performing."
He added that charges applied to bad loans had also dropped.
The percentage of mortgages in arrears made a slight increase, although this was mainly due to a reduction in the total number of mortgages, the bank said.
NRAM also repaid 300m to the government during the period, which has reduced its debt to the Treasury to 22.5bn.
Opportunities to expand
Northern Rock PLC said that the performance seen in the first half of 2010 was "in line with expectations", and that it was "continuing to prepare the business for a return to the private sector when conditions are right to do so".
"The company is well positioned to capitalise on future growth opportunities and is now able to compete on the same terms as other banks and building societies," said Mr Hoffman.
During the first six months of the year, the business lent out around 2bn to home buyers, but lost almost the same amount in retail deposits, which fell from 19.5bn to 17.6bn at the beginning of the year.
Chris Skinner, a banking analyst at the Financial Services Club, said that the loss came as a result of the interest paid on savings accounts and the fees the bank paid the government in order for it to guarantee 100% of all bank account deposits.
However as of 24 May 2010 the bank fell back in line with the other UK banks following the announcement by HM Treasury on 24 February 2010, and now offers the standard cover guaranteeing the first 50,000 of each customer's savings.
Northern Rock plc remains in Government ownership. According to the report, the bank is continuing to prepare the business for an eventual return to the private sector in the best interests of taxpayers.
