Northern Rock Shares Plummet

Friday, September 14, 2007

Shares in the lender have plummeted by 24 per cent after the decision was confirmed last night.
In the announcement, Northern Rock says that if the current market conditions remain until the end of 2007 it expects underlying profit before tax for 2007 to be around £500m to £540m, compared to £588m in 2006.

It says the outlook for 2008 will depend on the speed of the recovery in global wholesale funding markets and where interest rate spreads stabilise in the global wholesale funding markets, as well as the evolution of the company’s business model.

Although Northern Rock expects its new lending volumes to increase once the wholesale funding markets return to more normal volumes and prices, it must now plan on the basis that the wholesale funding markets will not return to historic levels in the short to medium term.