The nationalised bank revealed losses primarily driven by impairments on retail customer loans of £894.4m, impairments on treasury assets of £321m and “exceptional costs” of £163.6m.
Its 2008 mortgage redemption programme, which saw residential mortgage balances reduced by 27 per cent to just £66.7bn, allowed Northern Rock to reduce its Government loan by £18bn to £8.9bn, compared with £26.9bn at the end of 2007.
Residential arrears of over three months have increased to 2.92 per cent, compared with 1.87 per cent at the end of September 2008. Arrears of over three months on Together secured loans have increased to 4.53 per cent, two and half times the national average.
Retail deposit balances increased to £19.6bn, a level managed by the bank and the Government’s competitive framework, making sure Northenr Rock did not have a competitive edge on savings competitors.
New residential mortgage lending in 2008 was just £2.9bn, a tenth of 2007 lending. The bank last week revealed it was to lend a further £14bn in mortgages and small businesses over the next three years.
Northern Rock chief executive Gary Hoffman says: “We can now return to what we do well – mortgage lending. Our return to the mortgage market will be governed by focussing on responsible lending, understanding our customers’ needs, and offering them great products and service. These qualities lie at the heart of the future success of Northern Rock.
“We have an exciting opportunity to help consumers in the mortgage and savings markets and to secure the long-term future of the Company, while protecting the interests of the taxpayer. I am confident that we will deliver on that opportunity.”