UKAR's success in reducing balance sheet as another £9bn goes

UKAR’s balance sheet reduced by a further £9bn during the year ended March 31, 2017, bringing the total reduction to £81.5bn, 70 per cent, since the company was formed in 2010.

Reflecting the 31 per cent reduction in the year’s average balance sheet size, underlying profit before tax reduced by 33 per cent to £706m.

Ian Hares, chief executive of UKAR, said: “I am pleased with the progress made during the year. In the first half, we completed the transfer of our mortgage servicing operations to Computershare, ensuring continuity of service for customers.”

Britain’s ‘bad bank’ agreed the sale of two separate asset portfolios comprising performing buy to let loans for a total of £11.8bn.

Overall, lending balances at UKAR reduced by 45 per cent in the year to £19.5bn.

UKAR, which is based in Crossflatts, West Yorkshire, was established in 2010 following the financial crisis.

It acts as a ‘bad bank’ – a financial institution primarily holding distressed assets.

UKAR is owned by the Government and aims to maximise value for the taxpayer.

Mr Hares said: “We also repaid all outstanding secured funding on the B&B and NRAM balance sheets, enabling further asset sales, and in March we agreed the first phase of a programme to repay the FSCS loan extended to B&B. These actions are major steps towards realising our objective of reducing the balance sheet while continuing to maximise value for the taxpayer.”

UKAR said it made net government loan repayments of £3.3bn in the year ended March 31, 2017, bringing total repayments to £23.7bn since UKAR was formed.

The company added that 49 per cent of the government loans have now been repaid.

Mortgage accounts three or more months in arrears, including possessions, have reduced by 28 per cent bringing the total reduction to 88 per cent since formation.