Ulster Bank’s first profit in 6 years

A huge reduction in the cost of mortgages in arrears helped Ulster Bank to its first profit in six years, it was announced yesterday.

The bank’s impairment losses improved by almost €550m in the first six months of 2014 compared with the previous year — a reduction in costs of just under 90%.

The bank recorded an adjusted operating profit of €84m for the first half of the year, while net interest income has increased by €26m.

Commenting on the half-yearly results, Ulster Bank chief executive Jim Brown attributed the return to profitability of the bank to its business strategy.

“Today’s results demonstrate a second consecutive quarterly profit, the success of our existing strategy and sustained progress across all areas of the bank. The half-year adjusted operating profit of £69m reflects an improvement in net interest margin, a reduction in expenses and an improvement in impairment losses.

“Impairment losses have improved by 89% while the number of customers in mortgage arrears has now decreased month on month for the past 15 months, reflecting the investment to date in supporting customers in difficulty,” said Mr Brown.

The subsidiary of Royal Bank of Scotland made an operated loss of £381m in the first six months of last year and has had £15bn pumped into it from its parent company over the last five years to cover losses.

Last Friday, Royal Bank of Scotland chief executive Ross McEwan confirmed that negotiations with private equity firms have taken place over a possible takeover of Ulster Bank following a report in the Irish Examiner this week.

It is understood KKR and Apollo are among the private equity firms interested in the deal which would leave the current management team in place.

The bank reported its business lending as being ahead of schedule in the first half of the year with almost €800m of the allocated €1.2bn provided to businesses so far; 90% of business loan applications and eight out of 10 first-time buyer mortgage applications are also being approved, according to Ulster Bank.

“We are focused on sustaining the recovery of our business, while providing the best customer service on the island of Ireland through a simplified and more agile bank,” added Mr Brown.