Operating profits up 20% at Ulster Bank

Operating profits at Ulster Bank increased 20 per cent to £238 million (€353 million) in the first half of the year, boosted by a significant rise in the number of current account holders, writes Claire Shoesmith.

Total income was up 13 per cent at £613 million, while mortgage advances increased 14 per cent to £16.2 billion. Ulster Bank, which is part of the Royal Bank of Scotland (RBS) group, includes Irish mortgage provider First Active.

Cormac McCarthy, chief executive of the Ulster Bank group, said that momentum was good throughout the business, although he acknowledged that mortgage lending was slowing. He said, however, that activity had picked up in the second quarter compared to the first and that there was no shortage of business opportunities in this area.

During the half-year period the bank added 50,000 new customers, bringing its total client base across Ireland to 1.7 million. Loans to customers increased 21 per cent, to £41.1 billion, while customer deposits were up 14 per cent, at £20.1 billion.

Mr McCarthy said that the bank had benefited significantly from its current account promotion, which ran from March until the end of May, offering €150 in cash to anyone who switched their current account to the bank.

As a result, more than 47,000 new current accounts were opened in the first half, of which about 80 per cent were opened by people switching from another bank. According to Mr McCarthy, Ulster Bank currently has between 11 and 13 per cent of the current account market.

The group's business division also performed well, with business lending increasing by 37 per cent across a wide range of sectors. In May the group launched a new wealth business to serve the growing population of high-net-worth individuals.

Overall, the bank says that the credit environment remains benign despite recent rises in interest rates. Impairment losses fell by £4 million to £53 million.

Royal Bank of Scotland, which is locked in a bid battle for ABN Amro, also released its first-half figures yesterday, reporting a better-than-expected 11 per cent increase in first-half profit.

RBS, which includes Belgian bank Fortis and US Citizens Bank, is the UK's second-biggest bank.

The bank, which said it had not been substantially hit by recent turbulence in the capital markets, announced that its underlying operating profit in the six months to the end of June was £5.1 billion, up from £4.6 billion. Income rose 8 per cent to £14.7 billion.

RBS is leading a consortium which has offered €71 billion, mostly in cash, for the Dutch bank. This compares with a rival offer of about €65 billion from Barclays. Yesterday, RBS chief executive Fred Goodwin said he remained confident that the RBS-led group would win.

- (Additional reporting: Reuters)