Strong growth in income from fees and commissions helped Ulster Bank Group to produce a 6 per cent rise in pre-tax profit growth to £165 million sterling (about €269 million at yesterday's exchange rate) for 1999, according to headline figures.
But dealing profits were well down, probably due to loss of income from foreign exchange dealing after the arrival of the euro.
While Ulster Bank's parent, NatWest Bank, reported its full 1999 figures yesterday, Ulster released only headline figures.
According to an Ulster Bank spokesman, the NatWest results announcement was brought forward from the initial planned date of next Tuesday to yesterday, so as to precede Monday's extraordinary meeting of the Royal Bank of Scotland, where shareholders will vote on the RBS bid for NatWest. But Ulster Bank, which initially said it would announce its results with NatWest, then decided to hold back its full figures until next Tuesday "for operational reasons".
The headline figures did not include the normal comparison of results between its operations in the Republic and Northern Ireland. No spokesman was available to discuss the performance ahead of the release of the full results next week. 1999 was a difficult year for Ulster Bank, with its future the subject of much market speculation because of the troubles of its parent.
In October, NatWest decided to divest Ulster in an attempt to shake off the hostile bid by Bank of Scotland. It announced that Ulster would be floated or sold - the bank favoured flotation. But earlier this month, when rival bidder the Royal Bank of Scotland won the bidding war for NatWest, Ulster's future was assured within the enlarged group. The latest NatWest figures show that the group spent £65 million fighting the bids, with £45 million of that charged against group profits in 1999. Despite the uncertainty, the Irish bank produced 7.3 per cent of the NatWest group's pre-tax profits, unchanged on the 1998 contribution level. The Ulster Bank figures show a 5.4 per cent rise in operating income to £421 million sterling.
Operating expenses were 5 per cent ahead at £230 million, giving the bank a marginally improved cost/income ratio of 55.8 per cent, from 56 per cent. Ulster's net interest margin - the profit from its core lending and savings business - tightened slightly last year to 3.38 per cent, from 3.39 per cent. Within the operating income figures net, interest income was up 6.3 per cent to £272 million and income from fees and commissions was 25 per cent stronger at £111 million. But income from dealing fell by 37 per cent to £27 million. At £140 million, non-interest income was just 3.7 per cent ahead.
Operating expenses included a 6.3 per cent rise in staff costs to £136 million. The bank increased its provision for bad and doubtful debts by £1 million to £17 million.
While no breakdown of lending figures for the year was supplied yesterday, the bank disclosed that average interest-earning banking assets were 5.3 per cent higher at £8 billion. With a marginally lower tax bill, profits after tax were 8.8 per cent ahead at £124 million. But the bank's after-tax return on equity fell to 20.2 per cent from 24.3 per cent.
