Ulster sees first quarterly profit since ’09

Ulster Bank has posted its first quarterly profit since 2009 on the back of an 80% reduction in impairment losses.

The bank recorded an operating profit of €21m for the first three months of the year.

“Impairment losses have decreased by 80% with significant reductions across the mortgage, SME, and corporate portfolios reflecting progress made in addressing legacy issues including a significant investment in programmes to support customers in financial difficulty,” the company said in a statement.

Ulster Bank is a wholly owned subsidiary of Royal Bank of Scotland (RBS). Following a company-wide review of its operations completed last November, it was decided to keep Ulster Bank part of its core operations.

RBS created a bad bank — RBS Capital Resolution — to wind down its troubled assets. Ulster Bank has transferred some of its non-performing loans into this division.

This transfer, combined with the Government’s bank levy introduced in last October’s budget, resulted in a €12m increase in headline expenses, it said.

Its net interest margin, which is a key indicator of profitability, increased by 51 basis points to 2.36%, which is better than any of the three Irish domestic banks: Bank of Ireland, Permanent TSB, and AIB. The loan to deposit ratio is now 110%.

Ulster Bank chief executive Jim Brown said: “With our renewed focus on customer service and building a really good bank for our customers, we have seen a good response to our yes campaign for mortgage customers this quarter and a strong pipeline in business lending as a result of the Ahead for Business series of events across Ireland.

“We are focused on sustaining the recovery of our business which must be built around providing the best customer service on the island of Ireland.”

Despite the commitment made by RBS last November to keep Ulster Bank as part of its core operations, there is ongoing speculation about its future.

The Irish Examiner reported on Tuesday that it was in discussions with three private equity firms about a possible investment in Ulster Bank. It is believed these talks could conclude before the second-quarter results are released during the summer.

However, it is unlikely that there will be a merger with Permanent TSB as had been previously speculated, according to a person familiar with the situation.

RBS reported a £1.6bn pre-tax profit for the first three months of the year, which is double the profit for the same period last year.