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Northern Rock makes £1.4bn loss | Northern Rock makes £1.4bn loss |
(10 minutes later) | |
Nationalised bank Northern Rock has confirmed that it made a loss of £1.4bn in 2008, but says it is making "good progress" against its objectives. | Nationalised bank Northern Rock has confirmed that it made a loss of £1.4bn in 2008, but says it is making "good progress" against its objectives. |
It also said home repossessions jumped by 63% last year, with the bank holding 3,620 properties by the end of 2008. | It also said home repossessions jumped by 63% last year, with the bank holding 3,620 properties by the end of 2008. |
The bank said it was ahead of target in repaying the £26.9bn government loan, having cut the amount owed to £8.9bn. | The bank said it was ahead of target in repaying the £26.9bn government loan, having cut the amount owed to £8.9bn. |
It also confirmed its plans to increase mortgage lending, saying it would offer £14bn of lending in the next two years. | It also confirmed its plans to increase mortgage lending, saying it would offer £14bn of lending in the next two years. |
"Northern Rock has made good progress against the business plan objectives laid out in March 2008," said chief executive Gary Hoffman. | "Northern Rock has made good progress against the business plan objectives laid out in March 2008," said chief executive Gary Hoffman. |
While the 3,620 repossessed homes that Northern Rock held at the end of 2008 was up sharply from the 2,215 it held a year earlier, the total was lower than the 4,201 it held at 30 September 2008. | While the 3,620 repossessed homes that Northern Rock held at the end of 2008 was up sharply from the 2,215 it held a year earlier, the total was lower than the 4,201 it held at 30 September 2008. |
"Unfortunately, given the external economic backdrop it is likely that repossessions will continue to be a feature of the market over the coming year," said Mr Hoffman. | "Unfortunately, given the external economic backdrop it is likely that repossessions will continue to be a feature of the market over the coming year," said Mr Hoffman. |
The bank also confirmed a rise in arrears among its mortgage borrowers. | |
The number of borrowers in arrears of more than three months on its "Together" loans - loans of up to 125% of the value of a property - increased to 4.5%. | |
This resulted in £894m being written off. | |
'Responsible lending' | |
The move to increase mortgage lending - which was announced last month - marked a U-turn in Northern Rock's lending policy. | The move to increase mortgage lending - which was announced last month - marked a U-turn in Northern Rock's lending policy. |
Since being nationalised in February 2008, the bank has sought to reduce its mortgage book - a policy which it says has helped it make good headway in repaying the government loan. | Since being nationalised in February 2008, the bank has sought to reduce its mortgage book - a policy which it says has helped it make good headway in repaying the government loan. |
New mortgage lending at the bank was about £2.9bn in 2008, compared with £29.5bn in 2007. | New mortgage lending at the bank was about £2.9bn in 2008, compared with £29.5bn in 2007. |
However, following consultations with the government, the bank will now increase its lending. | However, following consultations with the government, the bank will now increase its lending. |
"We can now return to what we do well - mortgage lending," said Mr Hoffman. | "We can now return to what we do well - mortgage lending," said Mr Hoffman. |
The bank's return to the mortgage market would be governed by focussing on "responsible lending", he added. | The bank's return to the mortgage market would be governed by focussing on "responsible lending", he added. |