Ulster Bank posts massive £761m pre-tax loss
Ulster Bank made a pre-tax loss of £761m in 2010 despite boosting profits on a day-to-day basis.
Its operating profit climbed to £400m last year, up from £281m in 2009 but impairment charges, which is money set aside to cover against bad debts, jumped to £1,165m from £649m, largely due to its exposure to the Republic’s economy.
“As economic conditions in Ireland have deteriorated, impairment losses have increased,” Cormac McCarthy, Chief Executive, Ulster Bank said.
The accompanying statement from parent firm RBS offered cautious optimism for Ulster Bank.
“Ulster Bank performance should improve somewhat in the second half of 2011, although we remain cautious on the economic outlook in Ireland.”
The RBS Group managed to beat analyst expectations by reporting pretax profit for the group as a whole of £1.9bn in 2010, up from a loss of £6.1bn in 2009.
Chief executive Stephen Hester said he was pleased with the group’s results.
“Two years on from the global financial crisis, RBS’s recovery is ahead of schedule,” he said.
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, said “RBS has shown that its recuperation continues, with the shape of the latest version of the bank beginning to emerge.”
But he said Ulster Bank’s increased impairment charges have dented the group results.
“The situation in Ireland has had a painful effect on the bank's numbers,” he said.
Phil Dobbin, a banking analyst from Shore Capital said “RBS are clearly moving in the right direction, although we note that the company themselves state that they are vulnerable to ‘public mood’.”
Bruce Packard, a banking analyst from Seymour Pierce in London, said: “The (RBS) results are a trifle disappointing. But judging RBS on a quarterly basis is myopic, in our view. More important is the shape of the group in three years’ time.”
Mr McCarthy pointed to Ulster Bank’s focus on raising deposits.
“Against a backdrop of very challenging market conditions, we remain committed to raising deposits, pricing appropriately in the market and managing our cost base Notwithstanding increased competition and the negative impact of the sovereign debt crisis on both domestic and international markets, customer deposit balances have increased by 8% over the year.”