Northern Rock PLC made a pre-tax loss of £232.4m for 2010 in its first year of trading since the former Northern Rock business was split in two.
However, the bank still paid out bonuses of £13.1m to staff which it says reflects objectives being achieved for the year including the completion of the legal and capital restructure, early release from Government guarantees and separation from Northern Rock Asset Management.
The bank says the loss was in line with expectations and includes significant costs associated with separating from NRAM. The loss for the second half of the year was £92.4m compared to £140m in the first half of 2010.
Operating expenses for 2010 were £326.5m with a significant proposition of the costs associated with the split.
The company reported gross residential lending of £4.2bn in 2010 and net residential lending of £1.9bn.
It says the average LTV of its book is 62 per cent and the number of borrowers more than three months in arrears represents 0.17 per cent of the book.
The biggest bonus, totalling £185,000, went to chief financial officer Jim McConville. Chairman Ron Sandler was ineligible for a bonus. The £13.1m of bonuses was shared between 4,000 staff, averaging £3,250 per staff member.
He says: “While it is always disappointing to report a loss, this in part reflects the high level of liquidity held, the costs incurred in relation to the Governments retail and wholesale guarantees, which have now been removed, and other exceptional costs incurred as the Company was restructured.
“It remains a difficult trading environment for a small bank dependent on retail funding, with a combination of low interest rates, subdued mortgage market demand and high competition for retail savings. However, the underlying loss incurred in the second half of the year was lower than in the first half, demonstrating that progress is being made, and I am confident that the Company is on the right trajectory to profitability.
“We continue to work closely with UKFI on the strategic options for returning the Company to private ownership, in the best interests of taxpayers, and we will provide a further update in this regard in due course.”