UKAR Interim Results Announcement 2015

29 Oct 2015

View the report [PDF size 1MB]

View the full press release [PDF size 95KB]

UKAR BALANCE SHEET REDUCES BY A FURTHER £8.5 BILLION

UK Asset Resolution Limited ('UKAR') which incorporates Bradford & Bingley plc ('B&B') and NRAM plc ('NRAM') today issues its interim results for the six months ended 30 September 2015 ('H1 2015/16'). UKAR's mission is to maximise value for the taxpayer, whilst serving our customers well and treating all our stakeholders fairly.

Key highlights

  • Balance Sheet reduced by a further £8.5bn bringing the total reduction to £58.2bn (50%) since formation of UKAR in 2010.
  • Successfully repurchased all remaining NRAM covered bonds, totalling £3.3bn.
  • Government loan repayments of £0.5bn, bringing total repayments to £14.6bn since UKAR was formed. 30% of the government loans have now been repaid.
  • Mortgage accounts three or more months in arrears, including possessions, have reduced by 9.5% to 10,835 (73% since formation).
  • Underlying profit before tax of £612.1m in line with expectations and reflecting reducing mortgage balances.
  • Release of the remediation provision of £268m relating to unsecured loans greater than £25k, following the Court of Appeal ruling that these are not CCA regulated. As a consequence Statutory Profit rose to £856.9m (H1 2014/15: £674.6m).

Richard Banks, UKAR Chief Executive, commented:

"UKAR has continued to make good progress over the past six months, with a further £8.5bn reduction in our Balance Sheet. Arrears continue to fall and we remain committed to working with our customers to help them plan for the future. Earlier this year we commenced two transactions; the sale of £13bn of assets and the divestment of the mortgage servicing operation. Both are proceeding to plan."

Media Contact:

Investor Relations Contact:

Brunswick

UKAR

Nick Cosgrove / Jonathan Glass
Tel: +44 20 7404 5959
Email: ukar@brunswickgroup.com

Neil Vanham
Tel: +44 1274 806341
Email: neil.vanham@ukar.co.uk

UPDATE ON PERFORMANCE

Since formation in October 2010, the UKAR Balance Sheet has reduced by £58.2bn, including a decrease of £42.9bn in wholesale funding and £14.6bn of government funding. We continue to look for opportunities to optimise our funding structure where this generates value for the taxpayer. In the six months to 30 September 2015, UKAR successfully repurchased all the remaining NRAM covered bonds. Including the impact of collateral and derivatives the UKAR Balance Sheet has reduced by £4.6bn as a result of the buybacks. The transactions have reduced the ongoing funding cost to UKAR and further simplified the NRAM Balance Sheet.

In the six months to 30 September 2015 the Balance Sheet reduced by a further £8.5bn (H1 2014/15: £4.4bn) including the repayment of £0.5bn of government funding (H1 2014/15: £1.6bn). Repayments have been funded largely from a 5.9% reduction in lending balances (£3.1bn) reflecting £2.7bn of residential mortgage redemptions, £0.1bn of unsecured redemptions and £0.3bn of other regular repayments. As at 30 September 2015 lending balances stood at £49.7bn (FY 2014/15: £52.7bn).

Other cashflows were generated for the government in the six months in the form of interest, taxes and guarantee fees totalling £0.3bn (H1 2014/15: £0.4bn) bringing total payments to the taxpayer in the period to £0.8bn (H1 2014/15: £2.0bn). The reduction in repayments to the taxpayer is driven by the repurchase of the covered bonds and the accumulation of £0.9bn cash in preparation for the maturity of a £1.4bn covered bond in May 2016.

Administrative expenses for the six months were 6% higher than the equivalent period in 2014/15 at £89.8m (2014/15: £84.8m). Costs include investment in our IT infrastructure and a £3.0m provision for voluntary redundancies, which is a consequence of the reducing Balance Sheet and our success in managing down arrears.

Underlying profit before tax for the six months is £612.1m, a decrease of £80.8m from September 2014 (H1 2014/15: £692.9m) in line with expectations and primarily due to lower net interest income as a result of the shrinking Balance Sheet.

Statutory profit rose by £182.3m to £856.9m, mainly due to the release of a £268m provision. The provision related to a High Court ruling in December 2014 that customers with loans over £25,000 who had historically been sent incorrect documentation stating that their loans were regulated under the Consumer Credit Act ('CCA') should receive remediation in line with that provided in 2012 on unsecured loans of less than £25,000. In July the Court of Appeal overturned this decision.

The number of mortgage accounts three or more months in arrears, including those in possession, reduced by 9.5% to 10,835 as at 30 September 2015. The total value of arrears owed by customers has fallen by £7.8m to £82.8m, a reduction of 8.6%. This reduction is a direct consequence of proactive arrears management coupled with the continued low interest rate environment.

The total number of customers continues to fall in line with our objective to reduce our Balance Sheet. In total UKAR has just over 366,000 customers (FY 2014/15: 389,000), with 429,000 mortgage accounts (FY 2014/15: 455,000) and 98,000 unsecured personal loan accounts (FY 2014/15: 106,000). The majority of these loans continue to perform well with more than 94% of mortgage customers up to date with their monthly payments.

ENDS

Press releases

UKAR Interim Results Announcement 2017
30 Nov 2017
UK Asset Resolution Limited ('UKAR') which incorporates Bradford & Bingley plc ('B&B') and NRAM Limited ('NRAM') today issues its interim results for the six months ended 30 September 2017 ('H1 2017/18').
[Read More]
UKAR Annual Report & Accounts 2017
04 Jul 2017
UK Asset Resolution Limited ('UKAR') which incorporates Bradford & Bingley plc ('B&B') and NRAM Ltd ('NRAM') today issues its results for the year ended 31 March 2017 (‘2016/17').
[Read More]
Board Changes
27 Jun 2017
UK Asset Resolution Ltd (“UKAR”) announces that Michael Buckley has today retired from his role as Non-Executive Director from the Boards of UKAR, Bradford & Bingley plc and NRAM Limited.
[Read More]
Board Change
06 Apr 2017
The Boards of UK Asset Resolution Ltd, Bradford & Bingley plc and NRAM Ltd announce the appointment of Peter Norton as a Non-Executive Director of each Company, with immediate effect.
[Read More]
UK Asset Resolution announces sale of Bradford & Bingley assets for £11.8 billion
31 Mar 2017
Bradford & Bingley plc (B&B), part of UK Asset Resolution (UKAR), today confirms that following an open and competitive process it has agreed to sell two separate asset portfolios comprising performing buy to let loans for a total of £11.8bn to Prudential plc and to funds managed by Blackstone.
[Read More]
Board Change
01 Mar 2017
UK Asset Resolution Ltd (“UKAR”) today announces that David Lunn, a Non-Executive Director appointed by UK Financial Investments Ltd (”UKFI”), stepped down on 28 February 2017 from the Boards of UKAR, Bradford & Bingley plc and NRAM Limited to take up a new position within HM Treasury.
[Read More]