Northern Bank is healthy, says Mallon
NORTHERN BANK, which has posted pretax losses of £16.7 million for the first half of this year, is “strong and healthy” according to its chief executive.
Gerry Mallon believes Dankse Bank’s Northern Ireland subsidiary is “well positioned for future growth” despite allocating £42.2 million in its latest interim results to cover bad loans.
Northern Bank made an operating profit of £25.5 million in the first six months of 2010 but this was swallowed up in its provision for bad debts.
The bank’s profit position has greatly improved in the first half of this year compared to the corresponding period 12 months ago.
In 2009 Northern Bank reported pretax losses of £75.1 million and set aside £103.5 million to cover impairment charges.
Although the latest set of results highlight the ongoing difficulties in the local market Northern, which operates 82 branches and employs 1,700 people, appears more confident than some of its competitors.
The bank said income levels are being “largely maintained in difficult market conditions” but said low interest rates and strong competition contributed to challenging economic conditions in the North.
Last week First Trust, which is owned by AIB, posted losses of £52 million for the first six months of this year. It also set aside £76 million to cover bad loans.
In contrast Northern Bank actual write-offs for the first half of 2010 remained relatively low at £5.3 million.
Mr Mallon said he was pleased with the bank’s core business performance which he described as “very resilient”.
“The Northern Ireland economy is still very fragile and the level of impairment charges serves to remind us of this.
“Despite this, the charges are substantially lower than this time last year, having previously fallen for four consecutive quarters,” Mr Mallon added.
The bank’s latest interim results highlight Northern’s continued focus on cost control which resulted in 5 per cent cost savings compared to the first half of 2009.
Overall lending fell by 2 per cent in the last quarter while deposit volumes remained unchanged from quarter one 2010 levels which Northern Bank said resulted in a “continued improvement” in its funding position.
In general the bank said its “underlying trading performance is stable with income reduction reflecting revised liquidity accounting across Danske Bank Group”.