Impairment charge pushes National Irish Bank into red

National Irish Bank made an operating loss of €8m for the first nine months of 2012 after taking an impairment charge of €1.33bn for the period.

However, the Danish- owned bank posted a profit before impairment charge of €2.2bn for the first three quarters, up 35% compared with €1.6bn in 2011. Profit before tax was up 76% to €847m.

NIB’s Ireland country manager Terry Browne said: “The bank’s performance during the first nine months of 2012 was in line with expectations given the challenging, economic conditions.

“Impairment levels remain high, but are lower than in previous quarters this year and remain concentrated in our commercial property book.”

The level of loan impairments over the first nine months of the year reached €1.329bn compared with an impairment charge of €1.128bn in 2011. The bank described the quality of its €3.2bn mortgage book as “satisfactory”.

NIB, rebranded as Danske Bank, had a loan book of €7.3bn at the end of September, down from €8.95bn 12 months earlier. Net interest income was down from €92m to €81m on the back of lower demand for loans.

There is roughly €3bn in non-core loans that the bank will work through over a number of years. But it has no plans to sell off its non-core loan books, said a spokesman.

Costs soared from €71m for the first nine months of 2011 to €102m. Most of this increase was attributed to restructuring costs associated with making 100redundancies and closing its 27-branch network.

The deposit book was down roughly €2bn from just over €5bn at the end of Sept 2011 to just over €3bn at the end of last month. NIB says it prices its deposits in line with with the bank’s operations throughout Europe. “The loss of some corporate and institutional deposits in Ireland earlier in the year was not unexpected,” the bank said in a statement.

The Irish domestic banks have to pay an elevated price for their deposits compared with foreign-owned banks in the country. However, NIB said the deposit base was showing signs of stabilising by remaining unchanged from the previous quarter.

Mr Browne said: “The coming weeks will mark the beginning of a new era for National Irish Bank as we change our name to that of our parent, Danske Bank... The continued support and strength of the Danske Bank Group provides us with a good basis to offer strong competitive and sustainable services to our customers.”