Ulster Bank profit drops as release of bad-loan provisions slows

Ulster Bank's operating profit fell in the third quarter as the bank released less money that had previously been set aside to deal with bad loans than in the comparable period last year.

The bank's parent, Royal Bank of Scotland, reported that Ulster Bank delivered a £10 million (€11.3 million) operating profit for the three months to the end of September.

The Irish business released £21 million of loan impairment provisions as it level of problem loans continues to fall in a recovering economy.

But those figures are lower than last year when RBS’s report for the same period showed that Ulster Bank made a £54 million operating profit, driven by the freeing up of £39 million of provisions.

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Ulster Bank’s total income came to £150 million for the most recent quarter, comprising £104 million of net interest income and £46 million of other income.

The group booked a £1 million charge for “litigation and conduct costs” in the third quarter, after setting aside £34 million in the first six months of the year as it uncovered fresh “errors” in its personal and commercial loan books when working through thousands of cases where mortgage customers had been overcharged.

Mortgage redress

Ulster Bank took a €206 million provision last year to cover costs associated with mortgage redress for customers who were wrongly denied a European Central Bank tracker interest rate on their homes over the past decade.

Ulster Bank said earlier this week that it has returned all of its 3,500 impacted tracker customers to the right rate and made redress and compensation payments to 100 of these.

It said that 1,000 customers will have received payments by the end of the year, rising to 2,500 by the end of March and the remainder completed by the end of June 2018, it said. Ulster Bank borrowers found to have lost their homes as a result of the overcharging will receive an initial €50,000 payment.