Ulster Bank’s operating losses double
Yesterday’s full-year results for 2010 showed that Ulster set aside £1.16 billion in impairment charges for non-performing loans. This was up from an impairment of £649m in 2009. The operating loss figure was up from the previous year’s £368m.
Before the impairment charge was taken into account, however, Ulster Bank actually generated an operating profit of £400m, up 50% on 2009’s pre-impairment levels.
Customer deposit levels increased by 8% last year, but there was a 5% fall in the level of lending to customers. Also, the level of the bank’s mortgage customers falling into arrears doubled from 3% to 6%.
While the fourth-quarter operating loss actually fell slightly (by £4m) to £271m, year-on-year, the impairment charge for that period was up by £30m year-on-year and by £90m on a quarter-by-quarter basis, at £376m.
The widening in overall losses reflected the continuing deterioration in Ireland’s economic environment and a rise in default levels amongst personal and corporate loans.
Ulster’s outgoing chief executive, Cormac McCarthy, said that the bank remains a core part of the Royal Bank of Scotland (RBS) Group, and in turn that the largely nationalised British bank is fully committed to the Irish market. No further job losses or branch closures are planned at this time.
“We continue to take the right steps to manage the recovery of our business, which is reflected in the 50% increase in pre-impairment operating profit.
“Against a backdrop of very challenging market conditions, we remain committed to raising deposits, pricing appropriately in the market and managing our cost base.
RBS said that its Irish performance should begin to show signs of improvement, in terms of impairment levels anyway, during the second half of 2011, although it remains “cautious” on the economic outlook for Ireland.
On a group-wide basis, RBS reported a significant reduction in annual losses, from £3.6bn to £1.1bn, a move helped considerably by a £12m profit in the fourth quarter.
However, Ulster Bank’s performance and a fall in RBS’ investment banking profits meant the group actually failed to meet initial market expectations on its results.
Meanwhile, the process of finding a replacement for Mr McCarthy at Ulster Bank remains “ongoing”, according to the company.
