Northern Rock’s gross mortgage lending down 25%

3 August 2011 | By Natalie Thomas

Net lending was £0.3bn in the same period, compared to £0.9bn in the same period last year.

Northern Rock PLC, the so-called ‘good bank’ saw an underlying loss of £78.8m in the first six months of 2011, compared with a loss of £140m in the same period last year.

Mortgage accounts more than three months in arrears at June 30 2011 represent 0.26% of the book and the average LTV for new lending completed in the first half was 69%, up from 60% in the same period last year.

Mortgage balances as of June 30 2011 were £12.5bn, compared with £12.2bn at the end of 2010.

While loan loss impairment balances stand at £4.7m, compared with £2.4m at December 2010.

The company completed its first public securitisation issue in April 2011, when it issued £595m of A1 notes, which diversified the funding base.

It says demand from investors was positive and the deal was oversubscribed. The level of demand resulted in the initial issue being increased in size, and a further issue of A2 notes being completed in June 2011, which raised £542m.

Ron Sandler, executive chairman of Northern Rock, says he expects to begin trading profitably during the second half of 2012.

He says: “Northern Rock has made good progress in the first half of 2011. The Company continued to be loss-making, as expected, but losses are significantly reduced and we are generating momentum. The Company expects to begin trading profitably during the second half of 2012.

“The trading environment remains challenging and there is strong competition in the savings and mortgage markets. We are carefully managing the product mix to sustain margins and improve income, and we continue to take steps to align the cost base with the income generating capacity of the company.

“We are working closely with UKFI and our advisers to explore the options for a sale of Northern Rock, at the right time and in the best interests 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. 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.

Virgin and JC Flowers are both rumoured to be interested in buying Northern Rock PLC.

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