DANISH-OWNED National Irish Bank made a €618 million loss in 2010, an improvement on the €661 million loss the previous year. Provisions for bad loans fell by €37 million to €667 million.
The lender, which is owned by Danske Bank, has taken provisions to cover losses on loans of €1.6 billion, or 16.4 per cent of the bank’s loan book since late 2008.
Loan losses would decline but remain high in 2011, said Andrew Healy, chief executive of National Irish Bank. The 2010 impairment charge was 6.9 per cent of loans, down from 9.1 per cent in 2009.
“We will be very influenced by the performance of the economy and property values,” he said.
NIB’s loan book declined by 8 per cent to €9.4 billion during 2010, due mostly to redemptions.
The bank has taken provisions against 31 per cent of NIB’s €3.3 billion commercial property loans. Mr Healy said the bank had reshaped its business to take account of the reduction in the size of the Irish banking sector.
The bank “acted early and decisively”, leaving NIB in a strong position for the future, he said.
Costs were cut by 16 per cent to €113 million as a result of the closure of 28 branches, about half the bank’s network of outlets, and a 25 per cent reduction in staff numbers to 482. This year would mark the first full-year of the bank’s cost-cutting measures, said Mr Healy.
NIB has moved to “cash-free” banking at its branches and has an agreement with An Post which offers cash services to customers at post offices around the country.
Mr Healy had no comment on whether NIB had signed a non-disclosure agreement in the Government auction for €14 billion in deposits at Anglo Irish Bank and Irish Nationwide Building Society.
NIB was pleased with its growth in deposits, which rose by 28 per cent to €5.3 billion, and had “no funding challenges”, he said.
The bank had no plans to purchase Irish Nationwide’s €2 billion residential mortgages or other assets being sold. “We don’t see a need to do anything but grow organically. But we will keep our eyes open,” he said.
Arrears of 90 days or more on NIB’s €3.3 billion mortgage book stood at 1.7 per cent, a third of the industry average, said Mr Healy.
He attributed the lower arrears to the bank’s focus on low loan-to-value mortgages, the avoidance of selling through brokers and 100 per cent mortgages.
NIB had no plans to increase standard variable rates on mortgages that affect just 30 per cent of its customers. The remaining 70 per cent are on tracker rates.
Mr Healy said Danske was committed to supporting NIB, which is evident, he says, by the planned move to a new head office this year and the five-year deal with An Post.
Shares in Danske Bank, Denmark’s biggest bank, fell 11 per cent as it reported below-forecast profits and warned that loan losses at NIB would remain high.
The bank said that it would raise 20 billion Danish crowns (€2.7 billion) in an offering of new shares to keep it among the best-capitalised banks in Europe and to repay government aid provided during the 2008 financial crisis.
Danske said the failure of small Danish lender Amagerbanken will cost the bank €114 million.
– (Additional reporting: Reuters)
