The firm withdrew from lending two years ago when it was engulfed by financial crisis and mounting repossessions. Yesterday it announced another interim pre-tax loss of pounds 23.9m - hefty, but a huge improvement on the pounds 85.9m loss it suffered in the same period last year.
NHL's book of mortgages has shrunk from 71,000 to 52,000 as loans have been repaid and redeemed. Although the company has secured a stable financial footing, Jonathan Perry, chairman, said it needed new business if it was to rebuild and ensure a sustainable return to profitability.
Although coy about his target date for returning to lending, Mr Perry said: 'It is not unreasonable that we should achieve something within the next 12 months.'
In its bid to return to profitability, NHL is currently charging mortgage customers interest at 9.99 per cent, 2 points above the typical building society. Mr Perry accepts this is too high to re-enter the mortgage market, but NHL may be able to offer fixed-rate and other mortgage products rather than traditional floating rate loans. It is also keen to buy or manage the mortgage books of other lenders, enabling it to put additional capacity through its administrative systems.
Income from the off-balance-sheet companies that own pounds 1.7bn of the group's pounds 2.4bn mortgage book enabled NHL to cover its operating expenses, which dropped from pounds 26.2m to pounds 16.5m. However, falling house prices and non-performing loans necessitated another pounds 36.8m of provisions, pushing the company into loss.
The latest loss leaves NHL with a pounds 14.5m deficit on shareholders' funds. Less than three years ago it had net assets of nearly pounds 220m.
The number of mortgages more than three months in arrears had fallen to 3,139 by the end of March from 6,130 six months earlier. Sales of repossessed homes totalled 1,905 in the first half.
NHL has felt the recent improvement in the housing market and Mr Perry expects results to continue to improve. Legal and other professional costs, which amounted to pounds 8m last year and another pounds 1.6m in the first half, should fall after the recent completion of NHL's refinancing.
However, Mr Perry warned: 'We are vulnerable to any upsets, any reversals of the current reasonable interest rate environment and indications of improvements in housing.'
NHL shares, which slumped as low as 1 1/4 p last September, recovered another 3/4 p to 11 1/2 p. 'I might be a buyer,' Mr Perry said.Reuse content