Pretax loss of £54.5m at Northern Bank

NORTHERN BANK grew its operating profit by 51 per cent in the first quarter of the year to £18 million. That was before impairment charges of £72.5 million negated any benefits of its improvement performance.

Overall, Danske-owned Northern reported a pretax loss of £54.5 million for the period – double the losses incurred in the corresponding quarter last year.

Its decision to increase its impairments and provisions charge to £72.5 million from the £38.9 million it set aside in the first quarter last year reflects what the bank described as the continuing fragile economic environment in the North.

Northern Bank, which will be rebranded as Danske Bank from June, currently operates 72 branches and employs around 1,600 people locally.

Chief executive Gerry Mallon believes the results show that Northern has a strong core business and tight control of its costs.

Costs in the three-month period totalled £29.5 million – 4 per cent down on the corresponding period last year.

However, overall the bank’s lending volumes fell by 7 per cent, with deposit balances 5 per cent lower.

Mr Mallon believes income and costs are moving in the right direction, but he warned that the bank was not “immune” to what was going on around it in the local economy.

“As a bank with a very high level of capital and liquidity, a strong parent, and still 100 per cent shareholder owned, we are well placed to comfortably withstand the economic conditions.

“I believe impairment charges are going to dominate the agenda from both the macro economy perspective and the markets.

“But at the core Northern Bank is a very healthy bank. Our income levels have increased by 11 per cent year-on-year, and that is not something that all of our competitors can say.”

He said that the deposit-to-loans ratio remained above 100 per cent.