Northern Rock returns to profit

Nationalised lender Northern Rock has returned to profit in the first half of the year.

Pre-tax profit for Northern Rock Asset Management, dubbed the ‘bad bank', came in at £349.7m, more than a £1bn turnaround on the £724.2m loss recorded in the same period last year.

Northern Rock repaid £300m to the Government over the period, reducing the outstanding loan to £22.5bn.

"The company is continuing to show improving underlying profitability and 90% of the mortgage book remains fully performing," Northern Rock (Asset Management chief executive Gary Hoffman says.

"We have also seen an improvement in the impairment charge which was lower than in both the first and second halves of 2009."

This is the first set of results since Northern Rock was split into two at the beginning of this year.