Ulster Bank losses rise to €650m

ULSTER Bank saw its operating losses increase by 80% to £566 million (€650m) in the first half of this year, driven by a significant jump in impairment charges to cover bad loans.

Ulster’s latest figures — published yesterday as part of Royal Bank of Scotland’s interim presentation — show the bank’s loan losses jumped from £499m to £730m, year-on-year, in the first six months of this year. This pushed its underlying operating profit of £164m into an operating loss of £566m.

However, the bank’s management put something of a brave face on matters, saying its underlying metrics remain strong and that customer numbers and deposits continued to grow in the first half despite the overall figures still being impacted by “the challenging economic climate across Ireland”.

“The bank continues to focus on the long-term recovery of its business. Key priorities remain; deposit gathering, cost-base management and capitalising on emerging opportunities from a more consolidated banking market,” management said.

Group management at RBS added that macro-economic conditions continue to be the key driver of Ulster’s results. However, it added that “further progress is being made on economic, political and regulatory reform in the Republic of Ireland and recent trends suggest a more positive medium-term outlook, although key risks remain”.

On a groupwide basis, RBS saw its impairment losses fall to a first-half total of £4.21bn (€4.84bn); down from £5.16bn in the first six months of 2010.

However, it still showed a group pre-tax loss of £794m for the first half of this year, compared to a profit of £1.16bn for the corresponding period last year. In the second quarter, RBS made a pre-tax loss of £678m; down from a profit of just over £1.1bn for the same period last year.

Group chief executive, Stephen Hester, said the results prove that RBS’s restructuring momentum continues, with core business performance proving “resilient in challenging market conditions”.

Mr Hester said he is pleased with the level of progress in key aspects of RBS’s strategic plan, including large improvements in balance sheet structure and funding. He said there was no short-cut to achieving its goals.