Northern Rock reports £232.4m loss for 2010
Nationalised lender Northern Rock, rescued after its near-collapse, has reported a loss of £232.4m for 2010.
But the company said it was making progress, with income up and costs reduced during the second half of its financial year.
However, executive chairman Ron Sandler said that trading remained "difficult" in the current economic environment.
He said Northern Rock was still in talks with the government on returning the bank to private ownership.
The lender also announced that it was paying staff £13.1m in bonuses for 2010. Most of its 4,500 staff, who on average earn £25,000 a year, will receive about 10% of their salary.
Mr Sandler, who is paid £250,000 a year, is not eligible for a 2010 bonus.
Last year, Northern Rock was split into so-called "good" and "bad" banks.
The £232.4m underlying pre-tax loss is for the "good" bank, Northern Rock PLC, which holds savers' deposits and new mortgages.
The other half, Northern Rock Asset Management, holds the rescued bank's old mortgages and unsecured loans.
Mortgages balances for the year at Northern Rock were 18% higher at £12.2bn. Retail deposit balances fell from £19.5bn to £16.7bn, reflecting the closure of some low-margin savings operations.
Mr Sandler said the economic environment remained difficult for a small lender dependent on customer deposits to help fund operations.
"However, the underlying loss incurred in the second half of the year was lower than the first half, demonstrating the progress being made," he said.
The BBC's business editor, Robert Peston, said that the bank was being cleaned up for privatisation. However, he said Northern Rock was still lending too little to cover the costs of its overheads and the interest paid on deposits, he said.
Income from interest on loans was £407m. But it paid out £448m of interest, and administrative expenses were £251m.
Northern Rock's near-collapse in the autumn of 2007 signalled the onset of the banking crisis.
Having lent vast sums of money to residential home buyers, business ground to a halt when the wholesale credits markets froze and the company's access to finance dried up.
The government wants to sell-off Northern Rock PLC and recoup some of the taxpayers' money spent on the rescue.
Earlier this year, the government launched a tender for advisers to look at options for business.
Mr Sandler said he continues to "work closely" with the government on strategic options.