RESULTS: Ulster Bank has reported a strong performance in 2001, with profits up 19 per cent to €389 million, and remains confident about its prospects in the current year.
Announcing its results yesterday, Ulster Bank group chief executive Mr Martin Wilson said the restructuring of its businesses in Ireland was delivering increased efficiency both for the bank and its customers, and should support profit growth in 2002.
"We have set very stretching targets for Ulster Bank in the current year, which we believe are achievable. The bank is well positioned to capitalise on growth in the order of between 5 and 6 per cent as expected in the Irish economy in 2002," he said.
Ulster Bank has adopted a new business strategy in line with that used at parent Royal Bank of Scotland (RBOS), which included radically re-organising its branch network and the centralisation of processing and back-office skills. Known as Horizon, the project met much resistance from staff but, after some amendments suggested by an independent tribunal, it began to roll out last year.
Mr Wilson said restructuring was progressing "very well". "Ulster Bank staff, along with their colleagues at RBOS, will receive a 10 per cent profit share in the form of a bonus, while 70 per cent of the group's staff will also receive a 5 per cent pay increase on the back of the group's performance in 2001."
RBOS impressed the market, reporting a 32 per cent increase in profits to £5.8 billion sterling (€9.47 billion) in 2001, ahead of expectations. The bank also announced that the integration of National Westminster Bank, which it acquired in 1999, was progressing ahead of target.
RBOS group chief executive Mr Fred Goodwin has forecast the benefits of that integration will be £5.5 billion - £1.4 billion ahead of plan.
At Ulster Bank, total income grew by 13 per cent to €862 million from €765 million in 2000. The bank also focused on containing growth in costs during that period, with the bank's key cost/income ratio dropping from 53 per cent to 50.6 per cent.
At the end of 2001, Ulster Bank had total assets of £11.8 billion. It advanced total loans of £8.6 billion to customers and held £8.7 billion in deposits. Ulster Bank is a dominant player in the Irish small to medium-sized business sector.
Mr Wilson said it had not seen any worrying downturn in that sector but expects to see some tick-up in the level of bad debts over this financial year.
"We expect the bad debt situation to be marginally more negative in 2002 but we don't expect it to be tremendous."
In 2001, Ulster Bank increased its provisions for bad debts to 21 per cent in a year where its loan book expanded by 23 per cent. Mr Wilson has indicated those provisions will be higher this year.
The bank's policy will be to continue to support its customer base, regardless of sector, but will close assess the risks involved in any new business coming from sectors that may be under pressure, he said.
Ulster Bank reported a high level of new business from customers availing of the the Government-backed Special Savings Incentive Scheme. It estimates it has won more than 5 per cent of that business.
