Northern Rock reports reduced losses in first half
Nationalised lender Northern Rock PLC has announced reduced losses for the first six months of the year.
The bank reported a pre-tax loss of £68.5m in the six months to 30 June, compared with a loss of £142.6m the previous year.
Northern Rock PLC was created last year after the lender was split in two as a precursor to a sale.
The deadline for bids ended last week, with Virgin and JC Flowers reportedly interested.
There have been no reported bids from building societies. At least two, Coventry and Yorkshire, have ruled themselves out of the bidding.
The second part of Northern Rock - Northern Rock Asset Management - holds the bank's more risky loans, some of which might not be paid back. It is not due to be sold.
Northern Rock PLC said it expected to return to profit in 2012 and hoped to return to private ownership shortly.
The bank, currently owned by UK Financial Investments, did not announce a precise timetable for the sale process.
"We are pleased with the level of interest we have received and will continue to explore the sale option over the coming months," said the bank's financial statement.
The bank has struggled to make a profit because of low interest rates and its relatively small remaining loan book.
It said the reduced losses were the result of a rise in income from interest on loans - especially mortgages - and lower costs.
The bank also made a one off profit of £10.3m on financial positions - or hedges - taken to limit the impact of changes in financial markets.
Excluding this profit the bank reported an underlying loss of £78.8m.
In March, the bank announced 680 job losses as part of its drive to reduce costs.
In its statement, it said approximately half the employees had now left, with the remainder to leave during the second half of the year.
Gross lending in the first part of the year was £1.5bn in the six months to 30 June 2011, compared with £2bn the previous year.
The bank said the retail environment remained tough and competitive - especially while bank interest rates remained low, limiting potential profits on loans.
"The trading environment remains challenging and there is strong competition in the savings and mortgage markets," said Ron Sandler, chairman of Northern Rock.
The bank recently unveiled a 90% loan-to-value mortgage product in an effort to gain business from first-time buyers.