Ulster Bank third quarter operating profit down 70%

Ulster Bank has recorded a 70 per cent decline in third quarter operating profit, but said improving economic conditions had contributed to stronger new business volumes.

Third quarter profit totalled £114 (€157m) as against £394 million (€485m) for the same period a year earlier. However, the bank stressed that last year’s figures were inflated due to materially larger net impairment provision releases.

Operating profits were up from £80 million (€109m) versus the preceding quarter.

The group said operating profit for the first nine months of the year reached £245 million (€337m). Total income came in at £214 million (€294m), up from £178 million (€243m) for the preceding quarter.

Ulster Bank said improving economic conditions has helped boost new business, particularly in the corporate and personal mortgage segments. It said however that this had been offset by continued customer deleveraging and the sale of a portfolio of buy-to-let mortgages.

“Mortgage drawdowns have increased by 4 per cent year-to-date, reflecting Ulster Bank’s competitive rates and new offerings for new and existing customers. SME and Corporate new lending has increased by 51 per cent, year-to -date, with particularly strong pipelines on asset financing, agri and start-ups, including internationally-focused companies,” said Ulster Bank interim chief executive Paul Stanley.

The latest quarterly figures include a £23 million profit on the sale of the buy-to-let mortgage portfolio, as well as a £24 million gain realised on the closure of a foreign exchange exposure.

Excluding the impact of euro exchange rate movements, net loans and advances were down £0.2 billion from the second quarter of 2015, the bank said.

At group level, Ulster Bank's parent Royal Bank of Scotland (RBS) reported a third quarter operating loss of £134 million, down from a profit of £1.1 billion the year before, hit by restructuring and misconduct costs.

The bank, which has already set aside £4.5 billion to cover regulatory and legal actions, including £2.4 billion for litigation, warned future costs relating to litigation and past misconduct could be substantially higher than expected.

The bank is facing a number of probes into past misconduct including an investigation by authorities in the United States into claims it misled investors in mortgage-backed securities and an investigation by Britain's financial regulator into its treatment of struggling small firms.

RBS said attributable profit, including a £1.1 billion pound gain relating to the sale of its US business Citizens, rose by 6 per cent to 952 million pounds.

Share in the lender were down 1.8 per cent in early trading following publication of the group’s latest results.