Ulster Bank has reported a 5 per cent increase in profits to £131 million (€185.6 million), but has noted a slight deterioration in the quality of its loans.

In the six-months to the end of June, the bank, which is part of the Royal Bank of Scotland group, said that favourable currency movements had managed to offset weaker contributions from its treasury and stockbroking businesses and that its core business was strong.

The bank raised its provisions for bad debts to €25.5 million compared to €15 million last year. Ulster Bank, group chief executive, Mr Martin Wilson, said the increased provisions reflected growth in lending as well as a slight deterioration in asset quality. "Some sectors have suffered more than others, but it is not systemic," he said.

A large proportion of its loan book is concentrated in the property sector although Mr Wilson said that with interest rates at such low levels that this part of its loan book is not a concern.

He said there was no change in the status of the bank's stockbroking subsidiary, NCB. A deal to sell it to a French brokerage fell through and a recent management buy-out proposal foundered. Mr Wilson said that NCB remains a wholly-owned division of the bank.

"Nothing new has happened on any front. It had a tough time in the first quarter of this year in-line with other stockbrokers, but business has recovered," he said. Mr Wilson said the uncertainty surrounding the future of the brokerage had not had an impact on its day-to-day business.

The bank's total income increased by 9 per cent to €398 million boosted by strong demand for credit. Total loans advanced to customers rose by 23 per cent to €13.4 billion. Ulster Bank also recorded a 14 per cent increase in customer deposits to €12.3 billion.

The total number of customers in the Republic and North of Ireland rose by 7,000, according to the bank.

Mr Wilson said the core business was performing well in the second half of this year and suggested that the outlook over the coming months was very positive.

Royal Bank of Scotland Group, which is Britain's second-biggest bank, reported a 10 per cent rise in the first-half profit to £3.45 billion (€4.9 billion). The bank's share fell following the announcement on concerns about slowing economic growth on its core lending business. Profits were boosted by a £150 million rise in dealing profits.

Royal Bank of Scotland's bad debt charges rose to £742 million from £652 million a year earlier, in line with loan growth. Chief executive, Mr Fred Goodwin said that credit performance continues to improve and said he was broadly optimistic about the economic outlook.