Newspaper article The Journal (Newcastle, England)

Northern Rock Is a Hard Act to Follow

Newspaper article The Journal (Newcastle, England)

Northern Rock Is a Hard Act to Follow

Article excerpt

Byline: By Iain Laing

One of the few highlights of the shortened trading week will be the update today by Northern Rock on its performance so far this year.

The housing market is holding up better than expected, which should give a fillip to the Newcastle-based mortgage bank.

While mortgage approvals are slightly down on a six-month average, the slump so often predicted has not transpired yet.

Northern Rock will also benefit from a stellar arrears record that is half that of the industry average ( a feat in the current climate of soaring consumer debt levels.

It is a stock favoured by Merrill Lynch analysts, particularly as the bank "has stable margins, improving cost efficiencies, strong credit quality and capital advantages".

Northern Rock posted better-than-expected profits for 2006 despite fears the recent interest rate rises could have affected its business. Underlying profits were up 16.5% on 2005 at pounds 587.7m.

The group was confident about the market for 2007, with residential lending expected to be marginally up again, although the market will be looking out in next week's news for signs of weakening with another interest rate rise since its last results and one mooted in the pipeline before summer.

Meanwhile, car and bicycle retailer Halfords is set to confirm that trading has remained strong when it gives a pre-close update tomorrow.

Analysts at Seymour Pierce suggest there is an "outside chance" a suitor could crop up to make an approach for Halfords, but, even without any potential bid, the group's shares are marked down as an "outperform".

Trading was said to be in line with expectations when the group last gave a performance update and this is forecast to improve further.

Richard Ratner, retail analyst at Seymour Pierce, said full-year profits may come in some pounds 1.5m ahead of the pounds 75.8m he already expects. He said: "It is our view that Halfords has continued to trade well. There is also an outside chance a predator could appear."

Halfords reported pre-tax profits of pounds 43.5m in the six months to September 29 after a 9. …

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