Ulster Bank reports 2009 loss of £368m

ULSTER Bank made a loss of Stg£368 million (€414m) last year against a profit of £218m in 2008.

That is a loss of over €1m for every day of the year and the bank said it is not out of the woods yet.

Recovery will depend on the global economy performance and how the Irish economy responds to its current difficulties.

Loan loss provisions have gone up by a factor of six times from £106m to £649m, reflecting a backdrop of “extremely difficult market conditions”, it said.

More than half of the losses were taken in the final three months of 2009.

Ulster Bank has 1.9 million customers in Ireland with 146 outlets in the Republic of Ireland and a further 91 in the North.

In the past 12 months it initiated cost savings through the merger of First Active and Ulster and an initiative to cut 1,000 jobs, which is almost complete.

The huge rise in bad loans reflects the collapse in the property sector, while rising jobless numbers and falling wages have increased the number of stressed mortgages on the group’s books.

Commenting on the changed environment, Cormac McCarthy, chief executive of Ulster Bank, warned there would be “less competition and less banks in Ireland” as the economy adapts to the changed environment. Ulster Bank will continue to be part of the Irish banking sector despite suggestions to the contrary, he said.

Until NAMA clarifies itself and clearer guidelines emerge on valuations “a phoney war” will continue in the Irish market with few if any deals being done, he said. Lending has eased off across the economy from the business sector because “quality of demand is lower”, he said.

In many cases it is coming from “very stressed businesses” making for “a very difficult banking issue” at present, he said.

While the global economy was seeing signs of recovery, challenges facing Ireland remain.

Loans to customers fell by 4%, while customer deposits at the bank were down 5%. Ulster Bank said increasing competition for deposits led to a 7% fall in its net interest income.

“Our full year results for 2009 are set against the backdrop of extremely difficult market conditions. While the global economy is seeing signs of recovery, challenges facing the Irish economy remain,” he said.

“Our challenge now is to return the bank to profitability and I am confident that with the progress we have made to date, we are well placed to face the challenges ahead”, he said.

Ulster is owned by RBS, which is 84% owned by the British government.

It reported losses of £3.6 billion, significantly less than the £24bn loss suffered in 2008. A total of £1.4bn of Ulster Bank loans were held in the RBS non-core division in 2009, compared to £420m in 2008.

This is the division set up to wind down or sell unwanted or non-performing assets.


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