Ulster Bank recorded an operating loss in Ireland of just over £1 billion in 2012 as impairments relating to its mortgage book and other lending continued to weigh on the business.
However, chief executive Jim Brown said there are signals that the economy here is turning and that its mortgage arrears are stabilising.
Mr Brown declined to predict when Ulster Bank, which is owned by Royal Bank of Scotland, might return to the black but said it hopes to increase its mortgage lending in the Republic to about €300 million from €250 million in 2012.
Income down 10.7 per cent
Figures published yesterday showed Ulster Bank’s total income declined by 10.7 per cent to £845 million last year. The bank shaved £26 million off its overall expenses, which came in at £521 million.
This gave the bank an operating profit of £324 million, down from £400 million in 2011. It was dragged into the red by impairment losses of £1.36 billion – roughly the same level as in 2011. Mortgage impairments rose by 13.3 per cent in the year to £646 million while “other” lending was down marginally at £53 million.
In terms of its corporate book, Ulster had impairments of £276 million on property and £389 million in “other corporate”. The “group technology incident” last year, which led to customers being locked out of their accounts, resulted in the bank making a provision of €100 million, Mr Brown said.
The total impairment charge as a percentage of gross loans and advances was slightly higher at 4.2 per cent.
Mortgage ratio increase
The mortgage ratio increased to 3.4 per cent from 2.9 per cent in 2011. Mr Brown welcomed the introduction of personal insolvency act, which reforms our bankruptcy laws. “We think that’s an important part of getting the market back to some sort of normality,” he said.
Ulster Bank is processing about 1,700 arrears applications per month.
“We have about 13,500 accounts in some sort of forbearance arrangement as well. More broadly, the rate of increase in arrears has slowed over the last couple of quarters and I think we are at, or near, the peak in arrears and should see a gradual improvement through 2013,” he said.
Mr Brown said Ulster Bank does not “support debt writedowns”. “We’ve got a really broad range of options for our customers who are in arrears and as long as they are prepared to co-operate with the bank we have a solution for them,” he said.
Ulster Bank Key figures 2012
Total income –
£845m (-10.7%)
Total expenses –
£521m (-4.7%)
Operating profit before impairment costs –
£324m (-19%)
Impairment losses –
£1.36bn (-1.4%)
Operating loss –
£1.04bn (+5.7%)
