Nationalised Northern Rock plans to start offering credit cards and personal loans again as it readies itself for sale to the private sector, the group revealed yesterday.

The lender – the so-called good side formed when the bank split in two earlier this year – said it has the platform to offer a greater variety of retail banking services in a “safe way”.

The news came as the first set of results were released since the demerger on January 1 - which created a mortgage and savings bank called Northern Rock plc and hived off the bank’s more toxic loans into Northern Rock Asset Management.

Half-year figures showed Northern Rock AM returned to profit in the first six months amid a steep fall in bad debts.

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

But its sister firm reported an underlying interim loss of £140 million as it was hit by rising costs.

The “good” Northern Rock also lost nearly £2 billion of retail savings after the removal of the Government’s guarantee in May.

Deposits dropped to £17.6 billion from £19.5 billion at the start of the year, although Northern Rock also said the savings balance fell as it withdrew more generous savings products and closed its offshore savings operations in Guernsey.

Chief executive officer Gary Hoffman said the bank is moving in the right direction for a sale to the private sector, but stressed this would happen “only when conditions are right. We have got a business that is well capitalised and extremely liquid – a good platform for growth,” he said.

“In due course we could think about expanding the product range again.”

This could include credit cards and unsecured personal loans, as well as an expansion of its current account offering.

Northern Rock pulled its consumer loans and credit cards after the bank’s collapse amid the credit crunch.

Mr Hoffman said today’s figures are a “good news story” for the taxpayer, with profits at Northern Rock AM marking a major milestone for the ­business.

It repaid £300 million of state debts, but still owes a mammoth £22.5 billion, and repayment will be a slow and gradual process as mortgage accounts are redeemed.

Bad debts at Northern Rock AM - which is soon to be merged with the nationalised arm of Bradford & Bingley - fell to £277.6 million in the first six months of 2010, significantly lower than both the first and second halves of 2009. It now has £47.2 billion of residential mortgages on its books. Repossessions fell 10 per cent, although the number of accounts three months or more in arrears increased as it continued to shrink the mortgage book, leaving more risky debts on its balance sheet.

But the group warned that loan loss charges would “remain high” throughout this year, with unemployment and house prices the key.

It also said the “good” bank faces tough challenges as it battles against historic low interest rates and a subdued mortgage market.

Losses were in line with management expectations and should fall in the second half of the year as costs reduce, according to the lender.