Ulster Bank planning for double-digit lending growth

Ulster Bank expects gross new lending in the Republic to continue to grow by double digits as it puts a line under "mistakes of the past".

The bank posted gross new lending of 13 per cent to €3 billion in 2019 and Jane Howard, its chief executive, told The Irish Times that "if the economy holds up we would expect to take our share of it".

Asked about the prospect of Sinn Féin in government, Ms Howard said: “I can’t control who the next government is going to be and I’m not going to speculate...We’ve always worked with whoever’s in government and we will [continue to] work with whoever’s in government.”

Ulster Bank posted a profit after tax of €4 million for 2019, down from €85 million a year earlier. This was a result of an €80 million tax charge during the year.

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The bank, which paid a €500 million dividend to its parent Royal Bank of Scotland last year, also appeared to be drawing a line under the tracker mortgage debacle. Ms Howard said it hasn't made any new or additional provisions for trackers.

Tracker mortgages

Ulster Bank’s accounts show that it has taken a provision of €312 million to date in relation to trackers. Tracker mortgage balances reduced by €700 million, or 8.4 per cent compared with 2018, with trackers accounting for 38.2 per cent of total net loans at the end of 2019.

Ulster Bank is, however, awaiting a Central Bank fine in relation to the tracker issue. Ms Howard would not be drawn on what the bank is provisioning for that disciplinary action, which it hopes to be wrapped up by the end of this year.

“We can’t leave the past behind us, we’ve got to learn from it and make damn sure we never make the mistakes again,” she said.

Under those plans the bank will see considerable investment in digitisation, mainly by its parent, which will improve its offering.

At the same time, Ulster Bank is also looking to cut costs, something that will yet again see redundancies, most likely voluntary, Ms Howard said, although she wouldn’t be drawn on the precise plans.

Income at the bank fell from €689 million to €647 million, while expenses also fell from €657 million to €630 million.

Ulster Bank said the 6.1 per cent reduction in revenue was primarily due to a reduction in income from non-performing loans following the sale of a portfolio of assets, largely completed in 2018.

“We’ve no plans on the table for further loan sales,” Paul Stanley, its chief financial officer said, adding that it would anticipate a non-performing loan ratio of 5 per cent by the end of this year.

Net loans to customers increased by €400 million to €21.4 billion as against €21 billion in 2018. This reflected “strong personal and commercial lending, offset by the continued run down of the tracker mortgage book”.

There was new mortgage lending of €1.4 billion, while additional lending to businesses totalled €1.6 billion.

Customer deposits increased by €1.6 billion, or 8 per cent, “supporting a reduction in the loan-deposit ratio to 98 per cent from 105 per cent”.