Mortgage bank Northern Rock provided an upbeat trading statement today, saying full-year profits would be at the top end of analysts’ expectations.
The bank, which was promoted to the FTSE 100 in September, said profits had been boosted by a 40% jump in mortgage lending.
It added that unlike a number of other banks, including Barclays and Abbey National, it did not have any exposure to collapsed US energy group Enron.
Speaking ahead of an analysts’ briefing, the Newcastle-upon-Tyne-based group said its pretax profits for the year to the end of December would be at the high end of forecasts of £282m to £294m.
It added that it had enjoyed a strong year for mortgage lending, with net lending up 40%, and a further £2.4bn of loans in the pipeline, up from £1.9bn at the end of December 2000.
Northern said its share of the UK mortgage market looked set to be around 7%, which it claimed was double the level expected for a group of its size.
It added that despite expectations that house price growth was set to slow next year, the mortgage market, boosted by people remortgaging at lower rates, would remain sufficiently large to enable it to meet its lending targets.
The bank said arrears in lending remained good, running at less than half the industrial average.
But it added that it was increasing bad debt provisions for 2002 due to the deteriorating economy and the higher volumes of business it was generating.
Overall the group said it was expecting total income growth for 2001 to be “in excess of our mid-teens target”.
Following the statement, shares in Northern Rock edged ahead 6.5p to 581.5p.
EGi News 04/12/01
