NIB sets aside bad debts fund as losses top €496m in nine months

NATIONAL Irish Bank, a subsidiary of Danske Bank, said yesterday it is setting aside €544 million in bad debt provisions following a surge in operating losses by the Irish group.

NIB has posted losses of €496m for the nine months to the end of September compared with losses of just €49m for the same period last year.

The €544m set aside is up from €93.8m and accounts for about 20% of its total lending in the Irish market. Most of the impairment charges relate directly to the bank’s lending in the commercial property area, it said.

NIB, which accounts for just about 4% of the mortgage market, said its exposure to problem loans in that sector was minimal.

The bank reported a 6% rise at the operating profit level to €48m for the nine-month period, while income earned by the group fell 4% to €139m. Costs were down 8% to €91m.

Chief executive Andrew Healy said the results were in line with expectations against the background of extremely difficult economic and market conditions.

He said while signs of economic recovery are emerging internationally, the country “is still in a deep recession and has some way to go before turning the corner”.

“Our priorities in this environment are to continue to work closely with out customers through the challenges they face and to manage our costs,” Mr Healy said. “We are fortunate to be part of Danske Bank, a strong, well-capitalised European banking group who are committed to Ireland,” he said.

NIB’s parent bank Danske Bank Group, said it was setting aside a massive €2.8 billion for loan impairment charges. Operating profits rose by 97% to €3.2 billion, while income was up 48% to €6.2bn, it reported.

Danske said it was not in talks with Asset Resolution Corp, the company set up by Mark Duffy, the former boss of Bank of Scotland (Ireland), to buy problem loans from foreign banks operating in Ireland, who are excluded from selling distressed loans to NAMA.

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