Ulster Bank reported an operating loss of €441 million for the first quarter and said that impairment losses rose from €438 million to €540 million.
The bank said it made an operating profit of €98 million for the quarter before impairment charges.
Its parent, Royal Bank of Scotland, announced a first quarter loss as its exposure to Ireland's economic woes through Ulster Bank hit its earnings. RBS said it expected charges for bad debts from Ireland to remain high in the next quarter.
RBS, 83-per cent owned by the British government after it was bailed out during the credit crisis, made an overall first quarter loss of £528 million (€595 million).
Its earnings were hurt by £1.95 billion of impairments for loans which have turned sour.
"There are some headwinds, challenging growth and increasing capital intensity for our industry, that have a shareholder and broader read across. But despite that context RBS expects continued progress," said RBS chief executive Stephen Hester.
Losses on loans in Ireland hit £1.3 billion in the first quarter and RBS said they would remain high this quarter before "gradually declining" in the second half of the year.
The British banking sector was rattled this week by Lloyds' shock £3.2 billion charge to cover compensation for people sold insurance they could never claim or did not know they were buying.
Lloyds, 41-per cent owned by the British government after a credit crisis bailout, made the provision against payment protection insurance (PPI) complaints after banks lost a British court case on the way policies were sold to millions of customers..
The policies were typically taken out alongside a personal loan, mortgage or purchase to cover repayment if the borrower was unable to pay due to unemployment, sickness or accident.
Lloyds was also forced to set aside a further £1.144 billion (€1.3 billion) in the first quarter of the year to cover bad debts on £27.6 billion in loans at its troubled Irish business, Bank of Scotland (Ireland).
RBS said today that the impact from having to settle these insurance claims could be "material" but added it was too early to provide an estimate.
Reuters