Ulster Bank records €441m Q1 loss

ULSTER BANK’S financial woes continued in the first quarter of this year, with the British-owned bank recording an operating loss of £377 million (€441m) - £240m more than for the same period last year.

The bank said that impairment charges for bad loans increased from £376m (€438m) to £461m (€540m) on a year-on-year basis, but are “in line with the operating environment and reflect market trends.”

On a group-wide basis, Ulster’s parent — Royal Bank of Scotland (RBS) — reported a year-on-year rise in operating profit from £882m to £1.05bn, but saw its first quarter annualised losses (on a pre-tax basis) widen from £5m to £116m.

Ulster — which saw its annual operating losses double to €887m in 2010 — also put in place more than 4,000 mortgage arrangements, through its ‘Flex’ initiative which offers customers solutions to their money problems, including temporary reductions to repayments and loan extensions.

The bank added that while customer deposit levels increased slightly over the first three months of this year, there was a “significant deterioration” in customer credit quality.

It added that increased levels of loan defaults were also recorded in Ulster’s corporate investment and SME portfolios.

Loans to customers fell by 1%, on a quarter-by-quarter basis, as repayments continued to exceed demand for new lending.

RBS recently altered its management structure at Ulster Bank — bringing in former Royal Bank of Canada executive, Charles McManus as chief financial officer (replacing the already departed Senan Murphy) and New Zealand native, Jim Brown as its new chief executive, as a replacement for Cormac McCarthy. RBS said that the appointments proved its long-term commitment to its Irish operations.

In its commentary, yesterday, RBS said: “The early restructuring measures undertaken by Ulster Bank have left it in a position to capitalise on those growth opportunities that are starting to emerge in the, significantly more consolidated, Irish banking market; particularly in export-orientated sectors.”

“As the bank continues to focus on the long-term recovery of its business, key priorities are the development of its deposit-gathering franchise and the efficient management of its cost base,” it added.

Ulster also claimed that its financial results are being overshadowed by Ireland’s challenging economic climate, as impairments remain elevated.

However, RBS expects Ulster’s impairments to remain so for the remainder of the current quarter, before declining gradually during the second half of the year.


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