€700m losses ‘in line with expectations’
Saturday, August 04, 2012
Ulster Bank has reported an operating loss of £555m (€702m) for the first six months of the year — up by £12m on the same period last year, but in line with management’s expectations.
The second quarter of the year saw a near 38% annualised increase in losses to £245m at the Royal Bank of Scotland-owned bank.
At the time of the publication of its 2011 annual results last February, Ulster Bank management said 2012 would likely be another tough year for all banks in the Irish market. That said, its first-half figures for the current year show a £13m reduction in impairment charges — money set aside to cover non-performing loans — to £717m, when measured on a year-on-year basis.
This was due to a slight improvement in mortgage arrears levels among Ulster Bank’s customer base.
While its mortgage arrears levels are still rising, the rate of increase being reported is slowing. However, the bank said it remains too early to judge when arrears will hit their peak, although chief executive Jim Brown noted: "We are certainly nearing that peak."
"We continue to work with our customers who are in financial difficulty on an individual basis, to offer them appropriate support initiatives. We’re currently working through the implementation of our mortgage arrears resolution strategy, which reflects the changing needs of our customers in financial difficulty," Mr Brown said.
"We remain focused on the recovery of our business — rebuilding our franchise, supporting the communities in which we operate, and serving the needs of our 1.9m customers across the island of Ireland."
Ulster Bank’s total in-come amounted to £420m for the first half, which was down from £465m in the corresponding period last year.
Operating profit, before impairment charges, fell from £187m to £162m on a year-on-year basis.
The bank has also set aside €35m, in initial costs, to pay for its recent IT systems failure, which affected around 600,000 customers.
RBS, which yesterday reported a widening of first-half losses from £794m to £1.5bn, has set aside £125m to pay for the problem which engulfed the whole group.