Ulster Bank sees losses and arrears increase

Ulster Bank has reported a widening in losses, impairment charges, and mortgage arrears levels for the first quarter of the year, on the back of continuing economic stagnation and further falls in property prices.

The bank yesterday reported operating losses of £310m (€372m) for the three months to the end of March. While down on the £365m loss reported in the first quarter of 2011, the latest figure was up on the £233m loss generated in the fourth quarter of last year.

Similarly, impairment provisions — money set aside to cover non-performing loans — jumped from £327m at the end of December, to £394m as of the end of March; although, on a year-on-year basis, it was down from £461m.

Operating profit — before impairment charges — was also down; coming in at £84m. That compared to a pre-exceptional operating profit of £94m for the fourth quarter of last year and one of £96m for the first quarter of last year. Higher funding costs have been blamed for the fall in underlying income.

Ulster Bank said its financial performance continues to be affected by “challenging economic conditions”. It added that the level of its residential mortgage book in arrears currently stands at 4.3% — unchanged from the same quarter last year, but up from the 2.7% measured at the end of 2011.

“We continue to work with our customers who are in financial difficulty, by offering a range of support initiatives,” the bank said in a statement.

“We continue to support the changing needs of our 1.9m customers across the island of Ireland, by focusing on our strengths and delivering a genuinely helpful banking service,” it added.

Management also commented that it is “making progress” on “simplifying” its operating model, “to reflect the size of the market in which we now operate”.

Ulster Bank has been negotiating of late with workers’ unions IBOA and SIPTU over terms regarding the cutting of 950 jobs from the group.

It also said that the first quarter saw an 8% decline in customer deposit balances, while loans and advances to customers also fell by 4% — although weak demand for credit played a part in that.

Meanwhile, Ulster’s parent group, Royal Bank of Scotland reported a first-quarter net loss of £1.52bn; which was almost three times the £528m loss generated in the corresponding period last year.

Group management, however, described the period as illustrating “pleasing progress, within the context of a flat economic environment”.

The group, 82% owned by the British government since its post-financial crisis bail-out, is due to repay the last tranche of £163bn emergency state loans.