Ulster Bank posts £164 million loss

Ulster Bank has reported a loss of £164 million (€195 million) for the first quarter of the year, new figures showed today.

But in an interim management statement, parent company Royal Bank of Scotland said the Irish unit delivered "a significant improvement" in operating results as impairment charges declined, leading to a sharp decline in operating losses.

Year on year, the bank reduced its operating losses by £146 million, or 47 per cent, and cut losses by £79 million compared with the last quarter in 2012.

Impairment losses fell by £154 million compared with the first three months of 2012 to £240 million, a decline of 39 per cent, as the bank noted a "significant" reduction in losses on the mortgage portfolio.

The bank reported a profit of £76 million before impairment charges were taken into account.

But net interest income was down year on year, falling by £11 million as customer loan balances also reduced and the impact of impaired loans was felt.

This was partly offset by a rise in non-interest income of £5 million. Deposit balances rose too, climbing 7 per cent compared with the first quarter in 2012, as the bank continued to strengthen its balance sheet. Ulster Bank's loan to deposit ratio stood at 127 per cent in the first quarter of the year, compared with 147 per cent a year earlier.

At group level, Royal Bank of Scotland posted its first quarterly profit since 2011 as impairments on souring loans dwindled.

The firm swung into a net income of £393 million in the first quarter, beating the £317 million median estimate of six analysts in a Bloomberg survey. That compares with a loss of £1.5 billion a year earlier. Impairments fell 21 per cent to about £1 billion, the Edinburgh-based bank said in a statement.

Chief executive Stephen Hester said in February that the bank, which received the biggest banking bailout in the world in 2008, would complete the "most important" parts of its restructuring this year. Past attempts to return the lender to profit have foundered on mounting loan losses tied to the collapse of the Irish housing market and more than £2 billion pounds it was forced to set aside to compensate clients improperly sold payment protection insurance.

The bank which is backed by the British government, today pushed for the state to start selling its 82 per cent stake as early as next year even though it could mean a loss for taxpayers.

Chairman Philip Hampton said the aim was to have a business in strong enough shape to start preparing a prospectus with the government for a sale from the middle of 2014. "It could be earlier, that's a matter for the government," he said in an interview on the bank's website.

Britain pumped £45.5 billion into RBS during the 2008 financial crisis, leaving the government with a controlling stake.

Additional reporting: agencies