£4.2Bn gross lending by Northern Rock in 2010 is lower than pledged
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Northern Rock plc undertook gross mortgage lending of £4.2bn in 2010, falling short of its pledge to achieve £14bn lending in 2009/10, which was made before the bank was broken up.
In 2009 Northern Rock said it would provide £14bn in new mort-gage lending in 2009/10.
But on January 1 2010 two sepa-rate companies were created - Northern Rock Asset Management and a new bank Northern Rock plc.
Northern Rock Asset Manage-ment holds £49.7bn of residential mortgages and does not offer new lending.
Northern Rock plc, dubbed the good bank, is still lending and posted a £232.4m loss for 2010 in its annual results, which compares with larger group losses of £257.5m and gross lending at £4.2bn seen in 2009.
A spokeswoman for Northern Rock plc says the pledge to carry out £14bn of extra lending became invalid when the banks separated and Northern Rock plc did not carry on that pledge.
Melanie Bien, director of Private Finance, says: “Because of the extent to which the bank was bailed out by the government I think a lot of people would have hoped for higher gross lending in 2010.
“It is interesting that it has now moved the goalposts in terms of target lending, but this reflects the difficulties in the market.”
The lender recently launched a range of 90% LTV deals, which Bien says will help boost its lending in 2011.
Gross mortgage lending in the second half of 2010 was £2.2bn - 10% higher than in the first six months of the year at £2bn.
Ron Sandler, executive chair-man at Northern Rock, says: “It remains a difficult trading environ-ment for a small bank that is dependent on retail funding, with a combination of low interest rates, subdued mortgage market demand and high competition for retail savings.
“But I am confident the com-pany is on the right trajectory to profitability.”
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