Jonathan Perry, the chairman who has been nursing NHL back to health, said yesterday he expected the company to continue trading profitably in the absence of unforeseen difficulties. But with a pounds 153m deficit on distributable reserves, the group will have to be refinanced next year.
NHL's latest results, for the year to 30 September, show another large pre-tax loss of pounds 36.6m, though this is a great improvement on last year's loss of pounds 159.4m.
Operating losses in the second half fell by nearly three- quarters to pounds 6.8m, as bad-debt provisions continued to fall sharply. The number of loans more than three months in arrears has dropped to fewer than 1,800 from 7,711 18 months ago, and repossessions are falling.
NHL is working on plans to resume mortgage lending in the first half of next year. It has not made new loans for more than two years.
Mr Perry said NHL's loans would be price-competitive, but he added: 'We will not put ourselves under a great strain to put on huge volumes. It will be a graceful re-entry.'
The company's lending margins have widened as it declined to pass on interest rate cuts to its borrowers. In the latest year, this allowed NHL to increase its net interest income from pounds 41.5m to pounds 71.4m, despite a 23 per cent decline in the size of its mortgage portfolio.
The group has offered its borrowers some hope by passing on the full 0.5 per cent of the latest interest rate cut, when many building society borrowers received a cut of 0.35 per cent or less. But this action will still leave NHL's standard mortgage rate at 9.49 per cent.
NHL was unable to pay its preference dividend for the fourth half-year in succession, and no dividend payment is foreseeable. Mr Perry said the company's capital structure had to be addressed, but he would not be drawn on how he would tackle this problem.
NHL's banks were 'very supportive', he said. 'It's becoming quite an interesting proposition. This is a very considerable turnaround. '
NHL has concentrated on repaying the expensive debt of its main operating company, and has cut the amount outstanding to pounds 367m from pounds 708m in June 1992.