UK taxpayers' so-called "Bad Bank", UKAR, today reported that its Bradford & Bingley and Northern Rock (Asset Management) businesses have made an underlying pre-tax profit, up 145% to £1.089 billion.

Within that, costs are 21% down to £221 million; gains of £382 million have been made buying back RMBS worth £1.2 billion in a depressed market; and a total of £2.15 billion has been repaid to government (NRAM £2 billion, B&B £150 million).

Far from being the basket-case we were led to believe, the B&B business has an average LTV of 74% and the NRAM business has 71%, with over £100 billion of security supporting its £77 billion loan book. In the B&B business arrears are below the CML average and in the overall business arrears continue to fall after peaking in April 2011.

Richard Pym, UKAR Chairman, said:

"UKAR has a unique role as a business that has been tasked with the rundown of two major mortgage firms. Our people have done a good job of integrating the operations of B&B and NRAM and have made sure we have the right strategies in place to run down our Balance Sheet of more than £95 billion and deliver maximum value for the taxpayer."