HALF year figures for Northern Rock released today show a £140m loss.

Bosses at the "good side" of the bank - spun off from the so-called "bad part", Northern Rock Asset Management (AM), in January - said the results were in line with expectations.

But separate figures for Northern Rock AM, which houses the former banks more toxic loans, showed a return to profit and further falls in bad debts.

Northern Rock AM reported underlying pre-tax profits of £167.3m in the six months to June 30 compared with a loss of £243.9m a year earlier.

The group still owes £22.5bn to the taxpayer after Northern Rock's 2008 bail-out, having repaid only £300m in the half-year.

Bad debts at Northern Rock AM fell to £277.6m in the first six months of 2010, significantly lower than both the first and second halves of 2009.

It now has £47.2bn of residential mortgages on its books.

Chief executive Gary Hoffman said the Northern Rock AM results were encouraging.

"The company is continuing to show improving underlying profitability and 90 per cent of the mortgage book remains fully performing," he added.

The group warned that loan loss charges would remain high throughout 2010, with unemployment and house prices key risks facing the lender and its borrowers.

There was little sign of an imminent sale of the mortgage and savings arm of Northern Rock, with management saying they continued to prepare the business for an eventual return to the private sector - but only when conditions are right to do so, in the best interests of taxpayers.