The bank insisted its preparations for a return to the private sector remained underway and cautioned that the “trading environment was difficult”.
Northern Rock revealed that gross residential mortgage lending was £4.2bn for the year, with lending in the second half of 2010 10% up on H1 to £2.2bn.
Net residential lending was £1.9bn, while mortgage balances grew 18% over the year to £12.2bn.
Northern Rock’s average LTV for new lending was 62%, up from 60% in the first six months of 2010.
Mortgages more than three months in arrears made up 0.17% of its book at the end of 2010, compared to 0.07% in the first half of the year. Impairment charges amounted to £1.9m for the year, with costs significantly more in the H2 at £1.5m.
Ron Sandler, executive chairman, said: “It remains a difficult trading environment for a small bank dependent on retail funding, with a combination of low interest rates, subdued mortgage market demand and high competition for retail savings.
“However, the underlying loss incurred in the second half of the year was lower than in the first half, demonstrating that progress is being made, and I am confident that the company is on the right trajectory to profitability.”
He added: “We continue to work closely with UK Financial Investments (UKFI) on the strategic options for returning the company to private ownership, in the best interests of taxpayers, and we will provide a further update in this regard in due course.”
