By Jason Theodorou
Northern Rock Asset Management (NRAM), the part of Northern Rock known as the 'bad bank', has returned to profit. NRAM carries most of the bank's old mortgages and unsecured loans. Northern Rock has said that it will become part of the private sector only when its integrity is assured, as half-year figures showed that the 'good bank' side of the business made a loss.
The 'good' side of the bank, Northern Rock PLC, made a pre-tax loss of £142.6 million but pre-tax profit came in at £349.7 million for the first six months of the year. Despite results being in the red, bosses said that the results were in line with expectations.
NRAM chief executive Gary Hoffman said: 'The company is continuing to show improving underlying profitability, and 90% of the morgage book remains fully performing'.
'The company is well positioned to capitalise on future growth opportunities, and is now able to compete on the same terms as other banks and building societies'.
NRAM saw pre-tax profits of £167.3 million, compared with a loss of £243.9 million in the previous year. The bank made a loss on retail deposits, which fell from £17.6 billion from £19.5 billion, due to interest paid on deposits and the fees paid to the government for guaranteeing deposits.
The collapse of Northern Rock saw the beginning of the banking crisis, with the bank nationalised in February 2008. The group owes £22.5 billion to the taxpayer, after Northern Rock received a government bail out in 2008. The bank has repaid only £300 million, which means it now owes the Treasury at least £22.5 billion.
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