Bad bank profits leap to £1 billionMake Text Bigger
The ‘bad bank’ that owns former buy to let specialist Mortgage Express has announced a massive surge in pre-tax profits to just over £1 billion.
UK Asset Resolution, the government-backed bank that took over the debts of Northern Rock and Bradford and Bingley in 2010, claims the improvement is due to tough action to reduce arrears and stamp out fraud.
Mortgages three months or more in arrears fell 14% during the year to 33,216, with 98 homes repossessed.
The bank also repaid £2.1 billion of taxpayer money back to the Treasury.
“2011 has been a year of change and challenges and the outlook for the UK and wider economy remains uncertain,” said a UKAR spokesman.
“While interest rates remain lower than previously anticipated, higher inflation and rising unemployment continue to put pressure on household incomes and we expect more customers to experience difficulties during 2012.
“We are developing a programme of proactive contact with those customers in financial difficulty.”
Underlying profit before tax at UKAR was £1,089 million – £645 million higher than 2010 – while managers cut administrative costs from £277 million in 2010 to £220.6 million last year.
UKAR has 722,000 customers, down from 850,000 in 2010. They have 657,000 mortgages and 278,000 unsecured personal loan accounts.
During 2011, customers in arrears and financial difficulties agreed 37,000 mortgage arrangements and account modifications – down from 44,00 in 2010 .
Chief executive Richard Banks said: “We continue to make good progress against our objectives and made further significant repayments of the government loans. This improving performance is against a backdrop of challenging economic conditions and increasing hardship for some customers.
“Arrears and possessions are falling at B&B and we have stabilised the position with NRAM where arrears are now reducing due to our proactive approach.”
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