UK "bad bank" handed back £1.9bn to taxpayers in the first half of the year

UK Asset Resolution (UKAR), the state-run “bad bank” running down the loans of Bradford & Bingley and Northern Rock, has said it repaid £1.9bn to taxpayers in the first half of the year including £1.3bn of loan repayments (report).

At the end of 2012, UKAR had £27.8bn of funding from HM Treasury, plus a further £15.7bn owed to the Financial Services Compensation Scheme. In the first half of last year, UKAR made £1.2bn of cash payments to the Treasury, and £4.0bn by the end of the 2012 financial year.

Compared to the end of the 2012 financial year, the bank said it had reduced its balance sheet by £4.1bn to £82.8bn. It added that it had completed the integration of its IT infrastructure, which it hopes will help it make significant cost savings in the future.

Pre-tax profits rose by 39 per cent to £488m, while underlying pre-tax profits were up ten per cent, with UKAR citing a lower impairment charge thanks to continued improvement in the levels of arrears. This was partially offset by a reduction in net non-interest income.

Commenting, chief executive Richard Banks said:

UKAR has continued to make good progress in the first half of this year, with payments of £1.9bn made to taxpayers. 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.