Northern Rock’s ‘good bank’ cut losses in the first half of this year and expects to start making a profit next year.
It has cut its mortgage lending. Gross mortgage lending was £1.5bn, down from £2bn in the same period last year, and net mortgage lending was slashed from £0.9bn to £0.3bn.
The bank lost £78.8m in the first six months of 2011 compared with a loss of £140m a year ago.
Northern Rock also increased its total income from £28.5m in the first half of 2010 to £40.6m this year.
Northern Rock was nationalised in early 2008 in a £1.4bn government bailout.
Subsequently, Northern Rock was split into the ‘good bank’ – which holds all savings accounts and some mortgages – and the ‘bad bank’ known as Northern Rock Asset Management (NRAM) – which holds its toxic assets.
Northern Rock’s ‘good bank’, which is valued at around £1bn, is to be sold back to private ownership. Virgin Money, Coventry Building Society and buy-to-let mortgage lender Paragon are reported to be potential bidders.
Ron Sandler, executive chairman of Northern Rock, said: “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,” he said.
“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.”
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