NATIONAL IRISH Bank reported a pretax loss of €341 million for the six months to the end of June as impairment charges at the bank ticked up in the second quarter.
The bank, owned by the Danske Bank Group, was forced to set aside loan impairment charges of €367 million.
NIB reported an operating profit before impairment charges of €26 million, down 32 per cent.
Income fell 17 per cent to €84 million due to reduced customer demand, the impact of impaired loans and lower deposit margins. Costs fell by 6 per cent to €58 million.
“These results reflect the continuing difficult economic and banking market conditions,” said NIB chief executive Andrew Healy.
NIB had no plans to increase mortgage rates at this time, he added.
“These are tough times to be operating a bank in Ireland, and we are fortunate to have the unflinching support of a strong parent in Danske Bank. We have taken early and decisive action to reduce our costs and to reposition National Irish Bank for a market which is being radically reshaped.”
NIB deputy chief executive Kevin Gallen said he was “very cautious” about calling a peak to the level of impairments at the bank as property values have not yet floored.
“The primary reason is collateral values declined and continue to decline,” he said. “Obviously cashflow problems for customers in the property area continue to be a challenge.”
Accumulated impairment charges at NIB equal 13 per cent of total lending and guarantees, according to the Danske accounts. “Charges are likely to remain high in the coming quarters,” the parent bank states.
Mr Gallen said the bank was “certainly more than halfway through” its restructuring programme. “We feel we have acted quickly and decisively in repositioning the bank,” he said.
The bank is on track to close 25 of its 58 branches in the Republic in accordance with a restructuring plan announced late last year.
Some 13 of the 25 branches earmarked for closure have shut down. Staff numbers are on track to fall by 150 – or 25 per cent – with most of the redundancies taking place by the end of the third quarter.
NIB’s total loan book stood at €10 billion at the end of June, down 5 per cent on last year. Commercial property loans amounted to €3.3 billion, with most of the bank’s loan impairment charges in this area. Its mortgage book amounted to €3.6 billion.
Total deposits amounted to €4.2 billion, an increase of 3 per cent.
NIB made a pretax loss of €661 million in 2009, which Mr Healy described as possibly “the worst year in Irish banking history”.
Overall, the Danske Bank group recorded a profit of €420 million in the six months to June 30th, despite setting aside more than €1 billion for loan impairment charges. Danske said its level of impairment charges reflected “the persistently difficult economic conditions in Denmark and Ireland”. In its other markets loan impairments were “more modest”.
