NORTHERN ROCK will reveal this week that it has dived into the red on the back of huge writedowns.

Interest payments to the Bank of England and provisions against its mortgage book wiped out its profits last year.

The nationalised bank will finally disclose its 2007 results tomorrow, months later than originally planned.

Although the bank claimed in September that it was on track to make profits of more than £500m, soaring charges have pushed it into the red.

Bad-debt charges against the bank’s loan book are also expected to rise as British homeowners fall further behind with mortgage payments.

Arrears in the bank’s mortgage book climbed almost 20% between January and February, according to data filed by Northern Rock’s Granite securitisation vehicle.

Final drafts of the figures are still being worked on this weekend with the bank’s auditors at Price Waterhouse Coopers.

It is understood that Ron Sandler, the bank’s new executive chairman, is keen to write off as much as possible with his first set of results.

The bank has already taken writedowns of almost £120m to cover its exposure to US sub-prime investments.

The figures are also expected to reveal that the bank’s £100 billion mortgage book has been substantially reduced as part of Sandler’s attempts to scale back the business.

Many Northern Rock mortgage customers have been sent letters advising them to switch to other lenders when their current deal runs out as the nationalised bank will not be willing to offer them a new one.

Sandler will also use the results to reveal further details on how he plans to run the bank without contravening European state-aid rules. He has already unveiled plans to scale back the business, cutting 2,000 jobs.

A number of rival UK banks and building societies have been concerned by the high savings rates being offered by Northern Rock. Sandler has already closed down Northern Rock’s Danish savings business in response to complaints from Denmark’s biggest banks.

The bank may be subjected to price controls that would dictate the rates it could offer consumers for savings and loans.

The results come as the legal battle over Northern Rock intensifies. Jon Wood’s SRM Global, the biggest shareholder in Northern Rock at the time of its nationalisation, is expected to find out this week whether the government has agreed to its request for a judicial review. The government is expected to approve the request.

Calls for further investigation into the handling of the Northern Rock crisis intensified last week after the publication of a damning report on the affair by the Financial Services Authority.

An internal audit at the City watchdog revealed a catalogue of errors and oversights in the months leading up to the crisis.

Wood and other Northern Rock shareholders, including the UK Shareholders’ Association, are also working on a separate civil action that will be raised through the European legal system.

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