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Northern Rock increases lending by 17% in year before Virgin buyout

Northern Rock increased its gross mortgage lending by 17% year-on-year  from £4.2bn to £4.6bn in 2011, its final year under Government ownership.

In January, Virgin Money revealed it plans to advance £45bn over the next five years, averaging roughly double what Northern Rock advanced each year.

The bank’s accounts, to the year ending December 31, shows net residential lending was £1.8bn in 2011, which resulted in mortgage balances increasing to £14bn, from £12.2bn in 2010.

The average loan-to-value of new lending in 2011 was 70%, compared with the average LTV of the book of 62%.

The percentage of mortgage accounts in arrears increased from 0.17% in 2010 to 0.28% last year, which the lender says reflects “the mature nature of the book as well as the difficult economic environment”. The Council of Mortgage Lenders average is 1.98%.

Northern Rock says the majority of its funding comes from retail deposits, which represented 93% of total funding December 31.

The bank suffered an underlying pre-tax loss of £110.9m in 2011, down from £188.3m the year before.

Virgin Money, meanwhile, made an underlying pre-tax profit of £44.1m in 2011, up from £31.3m the year before.

Virgin Money acquired Northern Rock, which was owned by taxpayers, on January 1 for £747m in cash plus up to around £280m over the next five years. The deal was announced in November 2011.

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