In 2009 Northern Rock reported a loss of £257.4m, compared with £1.36bn in 2008. After the removal of one-off gains, this translates to a loss of £383m for the year.
However, the nationalised mortgage lender also admitted that more than 4 per cent of its borrowers were over 3 months in arrears for mortgage repayments by the end of 2009, up from around 2.25 per cent a year earlier. High levels of unemployment and other recession-related issues were given as explanations for this disappointing figure.
In January 2010 the ailing bank was split into "good" and "bad" operations. The "good" element: Northern Rock PLC, now holds savers' money and is expected to be sold this year, whilst the "bad" element: Northern Rock Asset Management, holds most of the bank's old mortgage loans which are will be dismantled.
It is hoped revenue from the sale of Northern Rock PLC will go towards repaying the £26b of public money that was injected into the bank to save it from collapse in 2008.
Chief executive Gary Hoffman has justified the £13.4m bonus payouts to its 4,500 staff saying the bank was around £500m ahead of the targets set with the Government for its recovery. The bank is also obliged to pay £1.5m tax on its bonuses under the Treasury's bonus windfall tax. Hoffman will waive his own bonus until the bank records profit again or is sold.
Despite the improvements in the state of the bank, Hoffman remains skeptical about the future: "The outlook for the UK economy remains uncertain. After a contraction in the economy during 2009, with increases in unemployment and house price deflation, conditions appear to have stabilised, but economic recovery is still expected to be relatively weak," he said.
