NORTHERN Rock will reveal this week how far its trading has improved as it prepares to sell off its strongest business back into the private sector.
The nationalised Newcastle-based lender will report another year of losses on Wednesday, but there have been encouraging signs of its recovery.
The Rock, which completed its restructuring into “good“ and “bad“ banks at the turn of the year, said it had seen “significant improvement“ in trading during the second half of 2009.
Growth in mortgage arrears has slowed, helped by record low interest rates and improved debt management. And financial conditions have stabilised enough for the Treasury to be able to remove the 100% guarantee on savings deposits at the end of May.
The Rock has been in public ownership since February 2008 after being bailed out by the taxpayer in the early stages of the credit crunch.
Results from the bank will inevitably spark a fresh round of speculation over who will buy the “good“ bank – with £19bn in retail savings and a £10bn mortgages book – when it returns to the private sector.
National Australia Bank was said to be sounding out advisers over a possible bid earlier this year, while Virgin Money – which almost succeeded in buying the business before it was nationalised – is also a likely contender.
Its more toxic loans have been retained in the existing bank, renamed Northern Rock Asset Management, which will remain in public ownership.
The Asset Management arm, which has about £50bn in mortgages and a £4.5bn portfolio of unsecured loan accounts, will not be taking on new business. There will be results from two of the UK’s biggest retailers, Morrisons and the John Lewis Partnership, this week.
The UK’s fourth biggest supermarket chain, Morrisons, should take the loss of chief executive Marc Bolland in its stride on Thursday with annual results expected to show strong sales and profits growth.
Consensus forecasts for the Bradford-based grocer put underlying pre-tax profits for the year to February at £759m, well ahead of last year’s £636m.
John Lewis has stood out as a success story among recession-weary retailers and the department store and supermarket business will hope to translate that into a profits upturn when it reports full year figures on Thursday.
The firm, which is co-owned by its employees, had to slash bonus payments 31% last year after underlying profits for 2008 fell 26% to £279.6m.
John Lewis, which also owns upmarket grocer Waitrose, has seen sales rally as consumer spending remained robust despite the economic gloom.
According to recent figures by industry researcher Kantar Worldpanel the grocer saw its market share rise to 4.3% in the 12 weeks to February 21 from the same period a year ago.
Sales figures have shown both the department stores and the supermarkets outperforming last year in recent trading. John Lewis stores saw a 14.8% increase in sales for the week to February 27, while Waitrose grew 11.7%.