First quarter operating profits slide 60% at Ulster Bank

Ulster Bank said on Friday that its operating profit fell 59 per cent in the year to March 31st, down to €32 million, on the back of an increase in restructuring costs and a reduced income on free funds.

Royal Bank of Scotland’s Irish subsidiary said that operating profits stood at €32 million in the first quarter of the year, compared with €78 million in the same period in 2016.

The bank said that the decrease “primarily reflects” gains from the sale of assets in the first quarter of last year that were not repeated this year (€28m), reduced income on free funds (€14m) and an increase in restructuring costs (€31m).

Lending declined, down from €26 billion in 2016 to €23.5 billion in 2017, although it was steady when converted to euro at €26.1 billion.

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Mortgage lending rose by some €200 million in the quarter, up 25 per cent on the same period in 2016. The bank’s low-yielding tracker mortgage portfolio declined by €0.9 billion to €10.8 billion.

Total income of € 168 million was € 37 million, or 18 per cent, lower than first-quarter 2016, “primarily due to reduced income on free funds and a € 3 million interim adjustment to the pricing of FX transactions between Ulster Bank RoI and NatWest Markets”, the bank said.

Deposits

Customer deposits increased € 2.1 billion, or 12.1 per cent, compared with first-quarter 2016, largely driven by an increase in commercial customer funding. The bank’s loan:deposit ratio reduced by 17 percentage points to 114 per cent.

The bank reported non-recurring impairment releases of some £24 million, up from £13 million in the same period in 2016.

Net interest income was steady on the same period in 2016, as well as the last quarter of 2016, at £105 million, while the bank’s net interest margin rose from 1.59 per cent as of end-December to 1.74 per cent, “principally reflecting income recognised on a cohort of non-performing loans in Q1 2017”.

However, it was still down from 1.75 per cent in March 2016.

The bank has a NIM of 3.01 per cent for its UK personal and business banking arm.