Ulster Bank in the red by £368m
Ulster Bank today reported a loss of £368m for 2009 after making significant provisions for loans it does not expect to be paid back.
The massive loss compared to a profit of £218m in 2008 and was largely the result of the bank setting aside £649m in impairment charges, up from £106m the year before.
Parent company Royal Bank of Scotland, which is 84% owned by the taxpayer, reported a loss of £3.6bn for the year, although this was better than some analysts had expected.
Ulster Bank chief executive Cormac McCarthy said the results were set against the backdrop of “extremely difficult” market conditions in both Northern Ireland and the Republic.
“While the global economy is seeing signs of recovery, challenges facing the Irish economy remain. Notwithstanding the positive impact of our cost reduction programme and margin stability, impairment provisions resulted in an operating loss of £368m,” he said.
“We took early and decisive action in 2009 to adapt our business to the changing landscape.
“We have made significant progress on our strategic plan with the completion of the merger of First Active with Ulster Bank. Our Voluntary Severance Programme, which will see over 1,000 people leave the organisation, is also near completion.”
The provisions for bad debts mainly related to property loans in the Republic, where the market saw a “substantial rise in defaults”.
Before these charges, the bank’s operating profit was £281m, down from £324m in 2008.
Loans to customers decreased 4%, which the bank put down to weak demand from business customers.
Deposits fell by 5% for the year, which it said reflected an “increasingly competitive Irish deposit market and reductions in wholesale funding” in the first quarter of the year.
The bank said the market had stabilised in the second half of 2009 and Mr McCarthy gave a more upbeat outlook for 2010.
“Our challenge now is to return the bank to profitability and I am confident that with the progress we have made to date, we are well placed to face the challenges ahead,” he said.