INTRODUCTION

Northern Rock informs the market of its continued strong trading performance to 30 September 2006, which is in line with guidance given at the time of the 2006 Interim Results and its strategic intention of achieving annual growth in assets of 20% (± 5%) and annual growth in underlying profits attributable to shareholders of 20% (± 5%).

STRATEGY

Northern Rock's strategy remains unchanged. It is based on combining sector leading, low cost operations, product transparency and customer driven distribution to produce attractive products at competitive prices. Strong retention and a low appetite for risk continue to generate good growth in high quality assets, leading to attractive returns to shareholders. We remain confident of achieving our strategic target of maintaining Return on Equity in the 19-22% range.

ECONOMIC BACKGROUND AND MARKET OUTLOOK

The UK economy remains healthy with stable GDP growth and historically low levels of unemployment. Despite the interest rate rise announced by the Bank of England in August, affordability remains good for mortgage borrowers who are in employment. We expect this relatively benign economic background to continue, providing strong support for the UK mortgage market.

House price inflation (excluding the rises seen in Central London) has generally slowed closer towards the rate of wage inflation, and housing transactions this year have risen from the levels seen in 2005, as First Time Buyers drift back into the market. This background has led to an increase in mortgage lending for house purchases during 2006 for the industry as a whole.

Demand for remortgages also remains strong as borrowers increasingly switch products when their current deal expires and as households reorganise their finances. Given these conditions, Northern Rock expects annual UK gross mortgage lending to be at least £330bn in 2006 and at similar levels in 2007.

LENDING

Northern Rock's strong lending performance has continued in the second half of the year, with all three lending arms (secured residential, secured commercial and personal unsecured) performing in line with expectations. We continue to target asset growth through absolute lending volumes rather than market share. Total net lending for the first nine months of 2006 is consistent with delivering asset growth for the full year well within the top half of our strategic range of 20% (± 5%).

Northern Rock's lending continues to be dominated by loans secured on residential property, which represent 90% of total lending. As the mortgage market remains strong and as our retention performance continues to gain strength, we can achieve our targeted growth with only modest increases in gross residential market share.

The total pipeline of new business at the end of September was £6.5bn, an increase of 18% since the end of June, which is consistent with our targeted balance sheet growth. The residential pipeline carried into the final quarter is £6.0bn, 21% higher than the end of the first half of this year.

Within residential lending, our lifestyle products, which comprise Together, Lifetime and Buy-to-Let, have accounted for 42% of completions so far in 2006, of which Together alone was 33%. Our retention continues to grow - this is reflected in the market share for redemptions. In 2006, our market share of residential redemptions is a step lower than both our share of stock and the market share of completions two years ago. This is also expected to be the case at the year end.

Unsecured lending represents just under 9% of total Commercial Assets. We continue to prefer unsecured lending where it is combined with a secured loan and these currently represent around 41% of the total stock of unsecured loans.

Growth in secured commercial lending remains modest in the light of market conditions.

We are continuing to develop our partnership with Lehman Brothers to offer near-prime, sub-prime and self certified loans to customers. The credit risk on these loans will not be borne by Northern Rock, but we will earn fee income for the loan introduction. We anticipate the venture being fully operational early in 2007.

CREDIT QUALITY

The credit quality of all our lending portfolios is closely monitored and tightly controlled. Residential arrears have shown no deterioration since the Half Year and remain below half the industry average of 0.96% (Council of Mortgage Lenders, June 2006).

Unsecured and commercial arrears remain low and neither has deteriorated since the position at the end of June.

Behavioural credit rescores in both the residential and unsecured loan books have remained stable since the Half Year.

In the absence of deterioration in the economic background, we expect the impairment charge in the second half of the year to be lower than that seen in the first half.

FUNDING

We have continued to maintain a diversified and balanced funding platform in the second half of the year. Retail funding volumes have remained high. We remain on track to expand our internet-based retail offering into Denmark early in 2007.

We have recently completed the third issue of 2006 from the Granite residential securitisation programme. As with previous transactions, the deal was heavily oversubscribed and as a result was upsized to £5.5bn. It was also keenly priced and at Libor +16bps matched the previous cheapest deal in May. A further issue is expected to be completed in the fourth quarter.

Following the recent upgrade by Standard & Poor's of its long term credit rating on Northern Rock, there has been more focus on traditional wholesale funding in the second half of the year.

We also expect to complete a further issue under our Covered Bond programme in the fourth quarter.

COSTS

Northern Rock's strategy is to grow costs between a half and two-thirds the rate of asset growth. Costs remain firmly under control and we continue to expect cost growth for the full year - and for next year - to be at the bottom end of this range. We also expect cost growth to be lower than income growth in line with our target, and therefore expect the cost:income ratio again to improve.

CAPITAL

Active capital management remains a key part of Northern Rock's strategy. We do not expect any capital issues in the second half of the year.

We are preparing for the introduction of Basle II commencing in January 2007, with full implementation by 2010, and are progressing our IRB application. Given the low-risk nature of our balance sheet, with a focus on prime residential lending, we continue to expect to benefit from the new regulations.

INCOME & PROFITS

Total spreads and margins for the full year are likely to be similar to the first half. Libor remains above Bank Base Rate which will impact liability spreads, offset by lower funding costs in each of our funding arms. Asset spreads are expected to be stable, reflecting consistent front end pricing and the fact that we have repriced our mortgage backbook through our genuinely open product stance.

The range of underlying post-tax attributable profit forecasts for the full year 2006 from 19 analysts is currently £339m to £363m, with an average of £357m. Northern Rock remains comfortable with this average, which represents growth of 15.9% over post-tax attributable profits delivered in 2005.

Dividend growth will continue to be in line with attributable profit growth in 2006.

COMMENT

Adam J Applegarth, Chief Executive, commented:

"Our strategy of strong growth in low risk assets remains in place. We have sustained the strong performance of the first half of the year into the second half."

"With a strong mortgage market - as house moving transactions increase and as households reorganise debt towards home loans - and our improving retention efforts, we have not had to see jumps in market shares to achieve our balance sheet growth target. This is good news."

"Credit quality - in each of our loan books - has remained good and shows no deterioration since the half year results."

"We remain on track to deliver against all of our strategic targets for the full year."

Further, more detailed, information on Northern Rock's 2006 trading performance will be produced at the Preliminary Results announcement on Wednesday 24 January 2007.

City Contacts Press Contacts Bob Bennett Brian Giles Group Finance Communications Director Director 0191 279 4346 0191 279 4676

Richard Moorin John Watson Investor Relations Corporate 0191 279 4093 Relations 0191 279 4676 Simon Hall Investor Relations Ron Stout 0191 279 6090 Corporate Relations 0191 279 4676

James Murgatroyd Finsbury Limited 020 7251 3801


Important Notice

This announcement should be read in conjunction with our announcement for the half year ended June 2006, copies of which are available from Northern Rock plc, Northern Rock House, Gosforth, Newcastle upon Tyne NE3 4PL or on our website at www.northernrock.co.uk

This document contains certain forward-looking statements with respect to certain of the plans of Northern Rock, its current goals and expectations relating to its future financial condition and performance. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Northern Rock's actual future results may differ materially from the results expressed or implied in these forward-looking statements as a result of a variety of factors, including UK domestic and global economic and business conditions, market related risks such as interest rates and exchange rates, delays in implementing proposals, unexpected difficulties with computer systems, unexpected changes to regulation, changes in customer preferences, competition and other factors.