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Northern Rock losses reduced

Six-month figures reveal the PLC has improved on its 2010 performance.

Nationalised lender Northern Rock PLC has reported a pre-tax loss of £68.5m in the first six months of this year. The figures are being hailed as a notable improvement on the 2010 equivalent, which saw a loss of £142.6m to June. The PLC has said it expects to return to profit in 2012.

The struggle to make a profit has been put down to low interest rates and the bank's relatively minor lending options.

The reduction in losses has been accounted for partly due to the rise in income from interest on loans, particularly mortgages.

Lower costs have also played an important role: earlier this year, the bank announced almost 700 job losses as part of a cost-saving drive. Furthermore, the bank make a profit of just over ten million pounds on financial positions (hedges) taken to limit the impact of changes in financial markets.

Northern Rock PLC was created last year after Northern Rock was split in two prior to a sale. Virgin and JC Flowers have both reportedly shown interest in the PLC. No building societies have put in any bids, the deadline for which ended last week. The second part of Northern Rock, Northern Rock Asset Management, will not be sold.

Tess Riley is a freelance journalist and social justice campaigner. She also works, part time, for Streetbank, and can be found on Twitter at @tess_riley