Ulster Bank reports 74% jump in Q2 operating profit

RBS owned bank says improving economy will lead to further impairment releases

Operating profit at Ulster Bank rose by 74 per cent to £80m (€113m)in its second quarter, compared with the prior year, as the bank said on Thursday that it continues to maintain a strong capital and funding position. (Photograph: Alan Betson / The Irish Times)

Operating profit at Ulster Bank rose by 74 per cent to £80m (€113m)in its second quarter, compared with the prior year, as the bank said on Thursday that it continues to maintain a strong capital and funding position. (Photograph: Alan Betson / The Irish Times)

 

Operating profit at Ulster Bank rose by 74 per cent to £80m (€109m)in its second quarter, compared with the prior year, as the bank said on Thursday that it continues to maintain a strong capital and funding position. On a half-year basis, operating profit rose to £131m as the bank announced an impairment release of £52m for H2.

New lending rose with mortgage drawdowns up 45 per cent compared with the first half of 2014, with £0.8 bn of new lending made available to business customers, an increase of 57 per cent from H1 2014. The bank noted that the significant weakening in the euro relative to sterling during H1 2015 had a “material impact” on Ulster Bank’s financial performance.

Ulster Bank chief executive Jim Brown said: “While today’s results were impacted by a weakened euro, we see an increased profit, reduced operating expenses and a continued trend of impairment releases driven by proactive debt management and the improving economic conditions.”

Of the financial institution’s so-called “bad bank”, RCR (RBS Capital Resolution), Mr Brown said that the division has materially concluded its work in Ireland ahead of time.

“Since its establishment in 2014, net assets have reduced from £4.8bn to £1bn, as of 30 June 2015, with a further reduction of £0.5bn expected to complete in Q3 following the announcements earlier this month”.

In the three months to June 30th, net income fell by 22 per cent on Q2 2014 to £132m, and down on by 18 per cent on a half-yearly basis to £265m “primarily driven by the weakening of the euro”. The bank’s net interest margin also declined, down from 2.35 per cent for Q2 2014 to 1.93 per cent.

Operating expenses decreased by £11m to £289 m “principally from a reduction in headcount and the property footprint coupled with a benefit from the weakening of the euro”.

The bank said that its low yielding tracker mortgage portfolio declined by a further £1.1 n, or 10 per cent during H1 2015 to £9.4 billion, reflecting customer repayments and the weakening of the euro. The bank’s overall mortgage portfolio stood at £15.9 bn.

The bank made an impairment release of £52m for H1 2015, reflecting “the benefits of proactive debt management and improving macroeconomic conditions”.