NIB bad debt provisioning contributes to €661m losses

MASSIVE bad debt provisioning and a sharp fall in earnings have resulted in annual losses of €661 million at National Irish Bank.

The Danske Bank subsidiary said operating profits fell 42% to €42m in the year to December 31, 2009.

Income fell 13% to €178m and the bank set aside €704m for impairment charges which resulted in the massive end of year loss at the bank.

“Our 2009 results reflect the severe economic recession and what has possibly been the worst year in Irish banking history,” said Andrew Healy, chief executive at NIB.

The fall in income was due to lower business being done during the year on top of higher funding costs.

After the property bubble Mr Healy said the property market “remains frozen”, which has forced the bank to substantially raise its impairment charges. The bank has responded “decisively to the harsh realities” of Irish banking, he said. In December it announced a major restructuring of the business to substantially reduce costs and to reposition the bank in “what is going to be a radically changed market,” he said.

Back then, it said it would radically prune its branch network, axing 25 of its 58 Irish branches, to result in 150 job losses.

“We are fortunate to be part of Danske Bank, a strong, well capitalised, European banking group. Danske has reaffirmed its long term commitment to Ireland and is fully behind our plans.”

Back in May Dankse acted swiftly when it emerged first quarter impairment charges in its Irish subsidiary were 40 times greater than before. It said then it was sending “senior people” to deal with the crisis because those in the Irish bank lacked the experience of dealing with such property meltdowns.

During the year, the bank achieved a 10% reduction in underlying costs, but after the inclusion of a provision for restructuring, total costs for the year were up 2%.