Danske cuts bad debt
Bank sees profits of £200k as impairment charges fall
One of Northern Ireland's biggest banks showed it's putting the worst effects of the credit crunch behind it by cutting its losses sharply in the first half of the year.
Danske Bank, formerly known as Northern Bank before taking on its Danish parent company's name last year, lost £800,000 in the first six months of 2012 in its Northern Ireland operations, a figure which might sound a lot but is well down on the £25.3m losses it reporting in the same period last year.
It puts the vastly improved performance down to the big reduction in impairment charges – money set aside to protect against loans the bank thinks won't be repaid – which itself bodes well for the rest of the economy here. Impairments were cut in the first half to £27.5m from £98.5m in 2012.
While the Belfast-headquartered lender looks to be on the road to recovery, it is still lagging behind its parent company which posted a bigger-than-expected rise in profit in the second quarter.
But on a like-for-like basis it's not far behind, eeking out a £200,000 profit before tax in the second quarter compared to a £1m loss in the first three months of the year.
Head of Danske Bank UK and Ireland Gerry Mallon welcomed the results.
"I am happy to report a return to profit in the second quarter of the year," he said.
"Impairments have continued on their downward trend in quarter two while we continue to make good progress in those aspects of our performance within our control. Underlying performance for the year to date has significantly improved."
And the Northern Ireland division is well ahead of the business in the Republic, formerly National Irish Bank, which recorded an increase in pre-tax losses to €17.4m in the second quarter compared to €8.8m in the first.
Danske in Northern Ireland's loan book has fallen to £4,305m in the first half of the year, down from £4,556m in the first half of 2012, and deposits are up by nearly £500m. That brings its cost-to-income ratio to 72% from 47% previously.
"Looking ahead, I am very confident about the development of our performance," Mr Mallon said.
"While we need to maintain a close eye on costs, our focus is on sustainable growth. Having restructured our business, improved financial performance and with a strong parent fully behind us, we have a unique position in our market."