Danske Bank could expand into other parts of the UK as it divests itself of most of its southern Irish business, its chief executive said.
Its UK and Ireland boss Gerry Mallon said expansion was a possibility for the former Northern Bank, which unveiled pre-tax profit of £1.4m in Northern Ireland in the first nine months of the year.
While the bank is well-established in Northern Ireland and operates in eight other countries in Northern Europe, it has just one central office in Great Britain.
He said the bank's affairs in Northern Ireland were "on the right track" as bad loans fell and the business improved in general, compared to a loss of £35.5m in the same period in 2012
"We are about a year ahead with where we expected to be in terms of recovery. We had forecast 2014 to be a break-even year but now it seems 2013 is our break-even year with even better profit in 2014 – thanks to income, control of our costs and a tail-off in impairments," Mr Mallon said.
The latest quarter was its second consecutive three month period of growth in Northern Ireland – but Mr Mallon said weakness in the Republic had prompted him to decide to wind down most of its southern Irish operations.
Personal accounts will be gradually wound down and around 150 staff will go, but the bank will continue to be a corporate lender.
"Corporate business in the south is very healthy and we will invest in and grow it further but we can't see any sustainable path to fundamental recovery of the personal banking business.
"The underlying business is loss-making. We can't see that changing in the medium-term."
He said Northern Ireland would not meet the same fate. "They are completely different businesses north and south. It's me who has made that decision and we continue to invest in the north, where we are in a very different position. In the Republic we have a 2% market share whereas we have a larger business with proper scale in Northern Ireland."
After serving as Northern Bank chief executive since 2008, and Danske's top man in the UK and Ireland since last year, he said he would be remaining in the job. "There is a lot of growth in this bank – there's a lot more that we can do in Northern Ireland and potentially beyond. There's a lot of potential growth in the UK (but how to go about tapping into that) is a very difficult question.
"We just don't have an answer on that. It's an easy and slightly glib thing for me to say. Expansion to the UK is an obvious thing but a less trivial question to answer is how we will do that."
Impairment charges, which have bedevilled all banks since the downturn, were down 66% for Danske in Northern Ireland in the nine months to September – £120.3m to £41.2m. Lending was down from £4.476m to £4.317m.
The overall economic outlook was positive, Mr Mallon said and he said he believed the middle of this year was a "turning-point" for the property market and that prices had finally bottomed out.
But more branches will close. It now has 59 branches in Northern Ireland compared to 95 a decade ago. He said next year would likely see more closures.
Gerry Mallon (43), is a south Belfast native and past pupil of Rathmore Grammar School. He studied economics at Cambridge University and took an MBA at the University of Ulster. In 2006 he joined then-Northern Bank as deputy chief executive and had the top job within two years. He is now Danske Bank head of UK and Ireland.