Top profits and low arrears at UKAR

UK Asset Resolution has reported underlying profit before tax of £856m for the first nine months of the year

Richard Banks, chief executive of UK Asset Resolution
Richard Banks, chief executive of UK Asset Resolution

UK Asset Resolution, the group that manages the so-called "bad bank" assets of state-owned Northern Rock and Bradford & Bingley, has reported underlying profit before tax of £856m for the first nine months of the year.

The figure, boosted by lower arrears and a correspondingly reduced loan impairment charge, represents an increase of 15% compared to the same period in 2012.

Interim results for the nine months to September 30, 2013, also show the group made £3.8bn of payments to taxpayers, including £3.1bn on loan repayments.

Chief executive Richard Banks said it had made “good progress” since the publication of its half-year results on June 30.

“It is also pleasing to see the continued reduction in arrears due to the dedication and professionalism of colleagues proactively working with our customers to help them achieve the right outcomes,” he said.

UK Asset Resolution - or UKAR - was formed in October 2010. Its aim is to maximise value for the tax payer while overseeing the orderly repayment of Government loans.

So far, the group has repaid £8.3bn of Government funding, including £1.7bn in the three months to September 30, 2013. During that time, other cashflows generated for the Government in the form of interest, taxes and guarantee fees totalled £0.2bn.

UKAR has also completed the sale of the NRAM standalone unsecured personal loan book for £0.4bn, generating a profit before tax of £21.2m. It has likewise reduced administrative expenses and seen the number of mortgage cases three or more months in arrears fall by 11% since June 30 to 18,993.

In total, UKAR has almost 490,000 customers, with 553,000 mortgage accounts and 126,000 unsecured personal loan accounts.

The latest report said: “The majority of these loans continue to perform well, with more than 90% of mortgage customers up-to-date with their mortgage payments.

“However, we do have a significant number of customers who are finding it difficult to meet their repayments.

“In those cases, we work closely with customers to offer a range of solutions to help them manage their circumstances.

“During the first nine months of 2013, 43,000 arrangements were successfully completed and approximately 1,600 account modifications were made to assist customers.”

The report added that there were promising signs of recovery in the UK economy.

“House prices have increased in the first nine months of 2013, which combined with continued low rates of interest, is good news for homeowners,” it said.

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