Northern Rock said it is “well positioned to deliver its objectives in 2010” after reporting a reduction in losses for 2009.

Northern Rock (Asset Management) has reduced its losses to £257.5 million in 2009, down from a loss of £1.35 billion in 2008, and said it is well positioned to deliver again in 2010.

The publicly-owned company said that a reduced loan impairment charge and improved net interest income were the main drivers behind the improved position and helped the bank record a profit of £466.7m in the second half of the year, compared to a loss in the first six months of £724.2m.

An increase in Northern Rock’s residential lending is also helping the bank move towards normality, although it was quick to confirm that “all lending was responsible and carefully underwritten on commercial terms”.

Chief Executive, Gary Hoffman, said that despite a considerable amount of uncertainty in the UK economy, the company is looking positively towards the future.

“We are looking forward, not back, and my colleagues across the business remain committed to delivering a high standard of service for all of our customers. We are on the right trajectory and I am confident that, with the current strong management team in place, we are well positioned to deliver against our objectives in 2010.”

The bank has raised eyebrows with its stance on staff bonuses. Given the vast reduction in losses, it said the total bonus pot is £14.9m, which includes £1.5m that will go directly to the government to pay the UK Bank Payroll Tax – a levy on bonus payments in excess of £25,000.

Surprisingly, Unite has spoken out in support of the bonuses: “Unite supports the bonus payments being made to the staff at Northern Rock as appropriate recognition for the turnaround in fortunes of the bank,” said Rob McGregor, Unite National Officer.

He added: “It should be remembered that those we represent are amongst some of the lowest paid workers in the finance industry. These modest bonus payments allow them to make ends meet and pay their household bills, not to buy second homes or Ferraris, as is the case with bonuses for traders in the City of London.”

Like many of his peers, Mr Hoffman has waived his entitlement to a bonus, and instead will be given a long-term incentive scheme based on the achievement of certain performance objectives.

Northern Rock was separated into two operating arms in October 2009 – Northern Rock PLC which holds the company’s savings books and Northern Rock (Asset Management) which continues to hold the mortgage and unsecured loan book.