Northern Rock makes a loss as depositors withdraw savings; HSBC results 'weak' on pre-impairment trends

Northern Rock has stumbled to a £146m pre-tax loss after savers withdrew their money following a Government guarantee on deposits which ended upon the creation of a good bank from the bad loans which hit from the recession and formed Northern Rock Asset Management (NRAM).

The resulting drop in retail deposits from £19.5 bn to £17.6 bn was offset by around £2 bn new mortgage lending.

By sharp coincidence, NRAM which owes £22.5 bn to the government actually made a small profit from receipts on bad loans, and repaid around the same amount of its pre-tax profit of £349.7 million.

"The mortgage market remains relatively subdued, with low interest rates having an adverse effect on banks which are mainly funded by retail deposits." said Chief Executive of 'good' bank, Gary Hoffman.

The good bank is also sponsoring Newcastle United's return to the Premiership after one season in the division below.

The bad bank meanwhile, will slowly write-off assets as it's riskier portfolio ceases to exist over the next twenty years.

HSBC, BNP PARIBAS COMMENT

HSBC meanwhile received the following comment today from Nomura Securities:

"HSBC's results showed a beat at the pre-tax level, driven by lower impairments. However, relatively weak preimpairment trends at the group level were the key feature within the results in our view."

French group, BNP Paribas received a rather more favourable comment on their quarterly results:

"BNP reported 2Q10 earnings well ahead of consensus, driven by strong credit quality and better revenues, for both of which BNP had offered positive guidance. We raise our 2010 EPS forecast by more than 20% and our 2011-12 forecasts by 10-15%, raising our price target to EUR 72 from EUR 64. With BNP having delivered one of the best sets of Q2 earnings, in our view, we expect the stock to extend today's gains."