NIB reports losses of €49m

NIB reports losses of €49m

National Irish Bank has reported losses of €49m for the nine-month period to the end of September, compared to a profit of €11m for the same period last year.

Owned by the Denmark's Danske Bank group, NIB blamed the necessaity of loan impairment charges (€94m) and "the very sharp downturn in economic and market conditions" for the turnaround in its fortunes.

(Loan impairment charges are monies set aside from profits in anticipation of potential losses, be these specific to individual customers or a general anticipated loss across the bank's business. If the losses do not materialise, the charges will be written back into the bank's accounts.)

The bank added that income increased by 9% in the period, to €145m, while costs reduced by 12% to €100m. Profit before loan impairment charges increased to €45m - an increase of 133% year on year.

NIB boss Andrew Healy said: "The underlying performance of our business has been strong and provides evidence of the progress we’ve been making in terms of building our customer base.

"However, the Irish economy’s decline has accelerated over recent months and the outlook for the next 18 months is not good…We have therefore taken a substantial increase in loan impairment charges during this quarter."

National Irish Bank’s lending book amounted to €10.5bn at the end of September 2008. Approximately 37% consisted of residential mortgages with an average loan-to-value of below 55%.

The bank said today that its exposure to property development and construction is approximately 16% of its total lending book and that it has had a cap on this area of its lending since late 2006.

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