The nationalised bank will make a loss this year as its mortgage book suffers in the credit crunch, a new update has indicated.
Northern Rock, which nearly collapsed with the onset of the credit crunch and had to be nationalised by the government last year, has released a gloomy new set of company figures.
Loan arrears were found to have shot up over January-March 2009 as housing market conditions worsened. Northern Rock loan holders who were behind on their payments hit 3.67 percent over the three month period, up from 2.92 percent at the end of 2008.
The bank also gave an update on its progress in paying back the £26 billion bailout loan it was given by the government. It said that £14.6 billion was still outstanding, meaning that it had paid off around £1 billion over the three-month period.
Northern Rock said that the financial climate remained difficult and that it was likely to remain "substantially loss-making" this year. Chief executive Gary Hoffman added: "The economic environment remains difficult but our trading performance in the quarter was in line with our expectations."
Four other UK banks have been either entirely or partly nationalised through emergency government rescue schemes, after their finances suffered in the credit crunch. Bradford & Bingley was wholly taken over by the taxpayer in summer 2008, while RBS, Lloyds TSB and HBOS - with the latter two banks later merging into the Lloyds Banking Group - were part-nationalised over the autumn.
