NORTHERN BANK has announced pretax profits of just £1 million (€1.13 million) last year, a significant drop on the £33 million (€33.67 million) earned in 2007.
The bank is setting aside £75 million (€85.67 million) to cover bad loans, mostly linked to the property market collapse.
Alongside National Irish, Northern Bank is part of the Danish Danske group, which acquired the bank from its previous owners National Australia Bank in 2005.
The bank believes it remains a stable, safe and secure financial institution, despite the profits fall.
Chief executive Gerry Mallon warned that defaulting borrowers would cause problems throughout the coming year. Despite this he said: “In the face of very challenging market conditions in 2008, these results represent a stable performance with a profit returned to Danske Bank Group.
“Despite the challenges in the global economy, and very volatile and nervous markets, Northern Bank’s performance remains on track and is maintaining its market position.
“The efficiencies we have put in place since becoming part of Danske Bank Group continue to have an impact, resulting in a lower cost base. This is reflected in our results and an improved cost-to-income ratio.”
Mr Mallon added: “Not surprisingly, the global financial crisis is reflected in our bad debt provision and these results show a prudent provision for potential losses.
“2009 will undoubtedly be a difficult year for economies, consumers and businesses. It is important to reinforce at this time that Northern Bank remains a stable, safe and secure institution, consistently applying sound banking practices through both favourable and challenging times.”
Ulster Bank, part of the mostly state-owned Royal Bank of Scotland group, said it is setting up a £250 million fund to help the North’s SME sector. The fund is part of a UK-wide £12 billion fund drawn up to support small and medium-sized enterprises.
Harry Elvin, head of business banking at Ulster Bank, said the fund would help the North’s small private sector, which comprises about one-third of the overall economy. The announcement has been welcomed by First Minister Peter Robinson and Deputy First Minister Martin McGuinness.
The joint First Ministers meet British business secretary and former Northern secretary Lord (Peter) Mandelson in Belfast today about the needs of the local economy.
