Belfast Telegraph

Northern Bank branches under threat from Danske web strategy

Danish bank's push towards online could see network reduced

By David Elliott

The future of Northern Bank's branch network could be in jeopardy after parent company Danske Bank announced a renewed focus on internet banking.

As part of a radical plan to reposition the Danish bank as one of the strongest in the Nordic region, Danske said customers prefer to bank digitally and that the traditional branch banking model is becoming outdated.

It follows news in June that Northern Bank's sister company in the Republic, National Irish Bank, is to close its 27-strong branch network.

"The conventional branch model is becoming obsolete as customers prefer our market-leading digital channels," Danske Bank said yesterday. "We will set new standards for digital innovation and cutting-edge advisory facilities, providing thorough personal consultation when it is needed."

Northern Bank has around 70 branches in Northern Ireland, a total it has slimmed down over the last year, and has itself been focusing heavily on its digital banking offering over the last few months.

The new focus from Danske was released on the same day as the Belfast-based bank reported financial results under the Northern Bank name, just before it joins with National Irish under the Danske Bank banner.

It reported a pretax loss of £71.4m in the nine months to the end of September, a figure which remains hefty but is well down on the £156m loss during the same period last year.

Much of the improved performance was down to a hefty reduction in impairment charges - money set aside to protect against bad debts- over the period of some £70m, although operating profit also climbed £12m to £52m.

The results will be a relief to Northern Bank's owner Danske Bank, which itself had managed to return to profitability in the third quarter of the year. It made a net profit of 1.31bn Danish Kroner (£140m) for three months to September after a K384m (£41.5m) loss at the same time last year.

But Danske's other Irish interest, National Irish Bank continued to struggle.

It made a pretax loss of €586m (£473m) in the first nine months of the year with an operating loss of €8m (£6.46m) amid still-elevated impairment charges relating to bad property debt.

That will provide a challenge for current Northern Bank chief executive Gerry Mallon who takes over at as head of Danske across Ireland next month.

He remained cautious about the Northern Ireland property market where Danske Bank has £767m worth of exposure.

"The Northern Ireland economic environment remains fragile as is reflected in the continued high level of impairment charges," Northern Bank said in its results release.

Gerry Mallon was also cautious about the operating environment for the business as a whole for the rest of the year. "With the prevailing economic conditions and subdued business demand there is no doubt the remainder of 2012 will remain challenging."

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