Nationalised bank to grow services before being sold
Nationalised Northern Rock plans to start offering credit cards and personal loans again as it readies itself for sale to the private sector, the group revealed.
The lender - the so-called good side formed when the bank split in two earlier this year - said it has the platform to offer a greater variety of retail banking services in a "safe way".
The news came as the first set of results were released since the demerger on January 1 - which created a mortgage and savings bank called Northern Rock plc and hived off the bank's more toxic loans into Northern Rock Asset Management.
Half-year figures showed Northern Rock AM returned to profit in the first six months amid a steep fall in bad debts.
It reported pre-tax profits of £349.7m for the first six months of the year, compared with a loss of £724.2m in the same period last year.
But its sister firm reported an underlying interim loss of £140m as it was hit by rising costs.
Chief executive Gary Hoffman said the bank is moving in the right direction for a sale to the private sector, but stressed this would happen "only when conditions are right".
"We have got a business that is well capitalised and extremely liquid - a good platform for growth," he said.
"In due course we could think about expanding the product range again."
Northern Rock pulled its consumer loans and credit cards after the bank's collapse amid the credit crunch.
Mr Hoffman said yesterday's figures are a "good news story" for the taxpayer, with profits at Northern Rock AM marking a major milestone for the business.
It repaid £300m of state debts, but still owes a mammoth £22.5bn, and repayment will be a slow and gradual process as mortgage accounts are redeemed.
Bad debts at Northern Rock AM - which is soon to be merged with the nationalised arm of Bradford & Bingley - fell to £277.6m in the first six months of 2010, significantly lower than both the first and second halves of 2009.