Ulster Bank profits driven by loans

ULSTER Bank Group has reported solid first-half profits, driven by good mortgage and business lending across the island.

Ulster, which incorporates First Active, boosted its contribution to first half profits of parent Royal Bank of Scotland by 18% to £215 million (€361m).

Total income for the half year rose 15% to £408m (€587m) while net income from interest charges was up 18% to £306m (€440m). Lending at the end of the period stood at £24.9bn (€35.8bn).

Ulster is the dominant bank in Northern Ireland with 100 branches, while it has 200 in the south where it continues to open First Active and Ulster Bank branches.

In the south the bank is among the top three in "terms of growth flows in mortgage lending."

According to Cormac McCarthy, chief executive of the group, if AIB has 17.5% of the mortgage market in the south, then Ulster is "at or above those levels" in the market.

Ulster and First Active led the market last month with the introduction of 100% mortgages for first-time buyers. Mr McCarthy rejected any notion that this is reckless. "The ability to repay is critical" and borrowers are judged on that basis, he said.

Market research showed this gap was in the market and it is a case of lending to "the right people in the right market who can afford to meet their repayments", he said.

He rejected out of hand any suggestion that we are sitting on a house price bubble.

"International lenders have provided this market with securitized loans for the housing market.

"That is a clear endorsement of the Irish property market from the outside," he said.

He forecasts house prices will continue to grow by between 5 to 6% over the next few years, buoyed by a strong economy and strong demand.

In Northern Ireland, the group is seeing a lot of consumer buoyancy while inward investment is also picking up.

Ulster has been a force in lending to the business sector and has carved out a niche in the SME segment of the Irish economy generally, where Mr McCarthy reckons its market share is between 15% and 20%

He said the bank's ambition is to achieve lead positions in its key markets, boosted by significant branch investment and expansion programmes.

"Being part of the RBS Group is one of the great positive differences in our business, which we will leverage to the full for our customers," he said.

He saw no dark clouds on the horizon and the outlook for the economy remained "extremely positive".