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Northern Rock losses down but arrears up 3 August 2011

The losses were significantly reduced from the £140m loss posted by the taxpayer-backed bank in the first half of last year, but the company said in a results statement it did not expect to trade profitably again until the second half of 2012.

Northern Rock’s loan loss impairment charge for the first half of this year stood at £2.3m, up from £0.4m at the same time last year and also up from £1.9m at the end of 2010.

The bank’s loan loss impairment balances – a provision made for future losses incurred if arrears levels increase – have also increased to £4.7m from £2.4m at the end of last year.

The rate of Northern Rock mortgages at or over three months in arrears grew to 0.26 per cent of the bank’s total mortgage book, which has matured from a zero arrears position at the start of 2010.

In its results statement Northern Rock said it was continuing to prepare for a return to private ownership with options being explored to sell the bank.

Ron Sandler, executive chairman of Northern Rock, said: "The trading environment remains challenging and there is strong competition in the savings and mortgage markets.

"We are working closely with UKFI and our advisers to explore the options for a sale, at the right time and in the interest of taxpayers. We are pleased with the level of interest we have received, and will continue to explore the sale option over the coming months."

He added: "In the meantime, it is business as usual. We remain focused on serving our customers, providing them with attractive products and a safe home for their savings and mortgages.”

Northern Rock PLC was created last year after the lender was split between into two, the so-called ’good’ and ’bad’ banks.



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