Ulster Bank in €69m profit

Ulster Bank turned an opening quarter operating profit just shy of €70m as lending increased across its business, the bank’s parent group said yesterday.

The operating profit —which represents the fifth consecutive profitable quarter — eclipsed that earned in the corresponding months of last year (€10m).

“Today Ulster Bank has announced an operating profit of £51m [€69m], representing our fifth consecutive quarter in profit,” said Ulster Bank chief executive Jim Brown.

“This quarter sees sustained progress across the key areas, demonstrating the underlying strength of the core Ulster Bank franchise.

“Both loan and deposit balances were impacted by a weakened euro but were stable on a constant currency basis. There was no net impairment charge this quarter.”

Total income rose marginally in Q1 from €242m to €255m while the bank’s operating expenses also climbed slightly to €187m.

Significantly, the improving health of the bank was illustrated by the absence of any impairment charge in its accounts unlike the €57m set aside a year ago.

Mortgage drawdowns also rose 55% in the opening months of 2015 compared to Q1 2014.

On a quarterly basis, however, the weakening of the euro hit the bank’s profitability as operating profits fell by €162m.

The results released by Royal Bank of Scotland come a day after the Ulster Bank chief ruled out a reduction in variable rates for mortgage customers.

Appearing before the Oireachtas finance committee, Mr Brown said the bank had no intention of reducing its rates which he argued are not overpriced.

The belief that the standard variable rate on a mortgage minus the ECB interest rate equals the bank’s margin is incorrect, he said.

“In reality, there are a range of other costs which also must be factored into the SVR and these costs are substantially higher in Ireland when compared to other markets in which Ulster Bank and RBS operates,” Mr Brown told committee members.

He added that the bank has made significant progress on mortgage arrears with month on month reduction in each of the past 25 months.

Some 10,000 customers who were in arrears are now up to date, with another 12,000 customers on alternative solutions. Of these 22,000 cases, only five personal insolvency proposals were vetoed by Ulster Bank in 2014 and these were due to their specific circumstances.

The committee heard that approximately 2,000 other customers were not making mortgage repayments or engaging with the lender.

“We believe that this remaining group of customers can be helped if they can be persuaded to engage with us,” said Mr Brown. “We published our commitments this week to encourage engagement, emphasise to customers in arrears that we have solutions, we will help them, and we will treat them fairly.”

Earlier in the week, the bank announced a range of measures among which was a guarantee that in certain instances customers would not be pursued for the residual debt owed following the sale of their home.

The bank’s parent, RBS, fared poorly in the opening quarter of the year as legal provisions and restructuring costs plunged it into the red.

The UK bank, 80% owned by British taxpayers, made a £446m (€614.9m) loss in the first three months of the year. RBS

has set aside £704m for future foreign exchange settlements.


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