Nationalised British bank Northern Rock reported a sharp rise in lending arrears in the first three months of 2009, blaming continued difficult conditions in the mortgage and housing markets.
Northern Rock said today accounts more than three months in arrears accounted for 3.67 percent of its loan book at the end of March, up from 2.92 per cent three months earlier.
The Newcastle-based lender said its bad debt charge for the first quarter was in line with its own expectations, and confirmed it would be “substantially loss making” this year.
But the bank said it had noted "tentative signs of improvement" in the number of accounts less than three months in arrears, crediting lower monthly repayments following a sharp drop in interest rates.
“The economic environment remains difficult but our trading performance in the quarter was in line with our expectations,” Northern Rock chief executive Gary Hoffman said in a statement.
Northern Rock became the first British casualty of the global credit crunch in September 2007 when wholesale money markets froze, depriving it of much of its funding, and forcing it to seek emergency support from the Bank of England.
The bank was taken into public ownership in February last year after efforts to find a private sector buyer failed.
Northern Rock said today its outstanding government loan fell to £14.6 billion at the end of March from £15.6 billion three months earlier.
It said its gross mortgage lending for the first quarter stood at £550 million.
In February, the bank signed up to a government programme under which it will lend an additional £14 billion of public money in an effort to stimulate the housing market. The first loans under the scheme will be made available later this year.
Reuters