Northern Bank pre-tax profits plunged to just over £1m (€1.125m) last year after massive provision for bad debt, it reported today.
Bad debt provision of some £75m (€84.4m) saw profits of the bank, owned by the Danish Danske Bank Group, slashed from more than £33m (€37.1m) 12 months ago.
But to be able to make a profit at all in the current global banking conditions was considered a major plus by the bank, whose boss said it remained “a stable, safe and secure institution”.
The pre-tax profits, declared in Danish Krone as nine million, equate to £1,075,000 (€1.2m) at current exchange rates.
But bank chief executive Gerry Mallon said: “In the face of very challenging market conditions in 2008, these results represent a stable performance with a profit returned to Danske Bank Group.”
He added: “Despite the challenges in the global economy, and very volatile and nervous markets, Northern Bank’s performance remains on track and is maintaining its market position.
“The efficiencies we have put in place since becoming part of Danske Bank Group continue to have an impact, resulting in a lower cost base. This is reflected in our results and an improved cost-to-income ratio.”
But for the bad debt provision the bank would have reported impressively improved figures – overall full-year operating profit before tax and debt charges came in at £66m (€74.2m), up from £27m (€30.3m) in 2007.
Mr Mallon said: “Not surprisingly, the global financial crisis is reflected in our bad debt provision and these results show a prudent provision for potential losses.”
While the Northern’s customers were not immune from the impact of the global financial crisis, the bank had been there for its customers in good times and bad, he said.
“2009 will undoubtedly be a difficult year for economies, consumers and businesses. It is important to reinforce at this time that Northern Bank remains a stable, safe and secure institution, consistently applying sound banking practices through both favourable and challenging times.
“We are committed to the long term growth of the Northern Ireland economy and to providing competitive choice for consumers to meet their needs even in the most challenging times.”
The bank also reported:
:: Net interest income down slightly to £162m (€182m) due to falling interest rates, while fees and other income fell 4% to £54m (€61m).
:: Operating expenses fell 23% to £150m (€168m) and significantly improved cost/income ratio.
:: Total commercial lending up 12% with deposits remaining stable.
The bank said the challenging market conditions continued in the last quarter of 2008 reducing the potential for top line growth.
It added: “Total income fell 3% compared to 2007 which is seen as satisfactory given very difficult market conditions. Total commercial lending increased by 12% including 13% growth in mortgages, with total deposits remaining flat year on year.”
There were no job cuts in the bank through 2008 – employee numbers actually went up slightly from 1,295 to 1,336.