Northern Rock has predicted it will be “substantially loss-making” in 2009, in large part due to higher provisioning against bad loans. The lender, which was nationalised last year, said on Thursday that 3.67% of its residential mortgage loans had now been in arrears for more than three months, an increase from 2.92% at end-2008. But in its first quarter trading statement, it also noted “tentative” signs of improvement in the trend for arrears of less than three months.

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