No rate rise despite €341m NIB losses

NATIONAL Irish Bank made pre-tax losses of €341 million in the six months to June 30, 2010.

The bank, which is undergoing radical restructuring involving closure of half of its branch network, said it has no plans to raise interest rates in line with the other banks.

The bank, a subsidiary of Danske, Denmark’s largest bank, saw some improvement, but has had to allow for a €367m in write offs in the first half, against a higher provision of €379m for the same period in 2009, most of which was caused by property lending.

Commenting on the results, chief executive Andrew Healy said: “These are tough times to be operating a bank in Ireland, and we are fortunate to have the unflinching support of a strong parent in Danske Bank.

“We have taken early and decisive action to reduce our costs and to reposition National Irish Bank for a market which is being radically reshaped,” he said.

Operating profits at the bank fell to €26m from €38m over the period. Its income fell 17%, to €84 million.

Apart from loan losses, other factors, such as weaker customer demand and tougher trading margins due to the high cost of borrowing, contributed to the lower profits.

Mr Healy said the results reflected continuing difficult economic and banking conditions.

NIB said the quality of its €3.6 billion mortgage book is “satisfactory”, though its market share is small at about 4%.

It has a high exposure to the variable sector, with about 90% of its customers having variable rate mortgages compared with the other Irish banks, which have a 60% exposure to tracker mortgages.

Overall the group is satisfied with the state of its mortgage book and feels no immediate pressure to start hiking rates in line with AIB and Bank of Ireland’s recent increases. The spokesman said one of the benefits of being part of Danske Bank was that NIB did not have the same funding issues as Irish banks.