Northern Rocks Profits Increase While More People Are Denied IVA Option by 45% Dividend Policy

I have just seen this artice in The Times and it is apparent that profits are booming at Northern Rock. So why does Northern Rock feel that it is perfectly ethical to treat over-indebted consumers seeking to enter into an IVA to avoid bankruptcy with so much contempt?

By having an arbitary policy of saying "no" to all IVA proposals that offer a dividend of less than 45% this is forcing many people into bankruptcy when they would rather repay what they can to their creditors over a 5 year period. This reflects a very poor approach to corporate governance and is arguably in direct contradiction to the Banking Code.

Still, profits are up boys!!


Northern Rock on track for bumper profits
By Miles Costello and Agencies

Northern Rock, the UK's seventh-largest listed lender, is on course to post a 15.9 per cent increase in full-year profits to £357 million, thanks to strong lending and the resilient housing market.

The continued rise in lending comes despite the fact that Adam Applegarth, the chief executive, remains one of the more cautious banking heads

The bank said today that it was on track to meet its full-year targets and was "comfortable" with analysts recently upgraded forecasts.

Northern Rock said it was expecting to grow underlying profits by 20 per cent over the full year and push up its loan assets by the same amount.

In an upbeat trading update for the nine months to the end of September, Northern Rock said its pipeline of new lending business, either arranged or imminent, had increased by 18 per cent since the end of June to £6.5 billion.

Adam Applegarth, the chief executive, insisted that customers' ability to service their debts was resilient.

"Credit quality - in each of our loan books - has remained good and shows no deterioration since the half-year results," Mr Applegarth said.

"We remain on track to deliver against all of our strategic targets for the full year."

Northern Rock, traditionally a conservative lender, said it was on target with its strategy of increasing costs at between half and two-thirds the rate of asset growth. It also said it expected its 29.8 per cent cost:income ratio to improve. The shares, which have risen by 25 per cent this year, value the bank at 5 billion.

Analysts at Keefe, Bruyette & Woods said Northern Rock's trading statement "confirms all the positive trends we have come to expect from the company - excellent volume growth, stable margins, good control of costs and better than peers credit."