Northern Bank believes it has ‘turned a corner’ after returning |to profit in the fourth quarter of last year.
The bank, owned by Danish company Danske Bank, yesterday reported a £100m loss for the whole of 2009 — compared to a £12m loss in 2008 — after setting aside £168m in impairment charges, mostly for loans it does not expected to be paid back in the property sector.
However, it also reported a small profit of £2.2m for the last three months of last year and chief executive Gerry Mallon said he was optimistic that 2010 would be a year of slow recovery ahead of full recovery in 2011.
“The return to profit in the fourth quarter suggests we have turned a corner,” he told journalists at a briefing in Belfast.
“I am more hopeful for a positive year this year.”
The bank said its operating profit of £68.6m was up 3% on 2008 and costs had been cut by 10% from a year earlier.
Despite mortgage growth of 6% year on year total lending fell by 4% because of a fall in corporate lending. Deposits remained steady.
“These results are as expected given the challenging market conditions and low interest rate environment which we and our customers continue to operate in,” said Mr Mallon.
Northern Bank expects the Bank of England to keep interest rates at 0.5% until late 2010 as it does not anticipate enough of a pick up in the economy to drive inflation to a point where the bank needs to raise rates.
However, Mr Mallon also thinks the bank will be able to take more business clients from the other local banks. “In the coporate market we have punched below our weight in the last year for a bank of our size,” he said.
“We have an increased appetite for risk this year versus last year. There are opportunities for us that some others will not be able to take.”
Northern Bank also said that of the £168.7m set aside for bad loans, write offs only amounted to £7.6m. “Given the local climate we had to make prudent provision for potential losses. However these provisions have reduced across the year and we were able to comfortably absorb these within our strong capital base,” said |Mr Mallon.