National Irish Bank has blamed intense competition and rising bad debt provisions for an almost 40 per cent drop in profits at National Irish Bank in the six months to the end of March. Interim figures for the bank reveal that pre-tax profits fell to £9 million (€11.4 million) compared with £14 million in the same period last year reflecting a very disappointing performance for the Australian-owned bank.
NIB is still the subject of an on-going investigations into the marketing of unauthorised offshore insurance products and interest loading on customer accounts at certain branches.
NIB chief operating officer, Mr Owen Vanzuyden, said these events had damaged the bank's business over the past couple of years but this had improved in recent times.
"Our results are disappointing when you compare them with the performance of our competitors, but NIB is emerging from a difficult period and we have worked to create a new bank over the last two years," he said.
Pre-tax profits were depressed by a £2 million provision for bad debts during that period, which the bank said was in line with its normal provisioning practice. The bank's underlying business has grown, with loans advanced to customers up 10 per cent to £1.4 billion from £1.3 billion. This includes home loans of £498 million compared to £466 million in the same period last year. Deposits also rose, climbing to £1.3 billion from £1.2 billion. Mr Vanzuyden said the underlying growth in core lending and deposit activities was very encouraging.
He said heightened competition since Bank of Scotland's entry into the Irish mortgage market last year had further depleted its net interest profit margins, but it was satisfied it had managed to contain further erosion.
He stressed National Australia Bank's (NAB) continued commitment to achieving growth in the Irish market.
The bank is understood to have held some discussions about a possible link-up with First Active in recent months but nothing has emerged from these. NAB yesterday announced a reorganisation of its senior management and hinted at acquisitions in the northern hemisphere with a particular focus on Britain and Ireland.
