Ulster Bank first-half profits jump by 20%

Profits grew by 20 per cent at Ulster Bank over the six months to the end of June, boosted by strong lending to both mortgage customers and businesses.

The group, which includes First Active and Ulster Bank on both sides of the Border, said operating profits had climbed to £182 million (€265 million) from £152 million in the same period a year earlier.

Total income was 15 per cent stronger at £471 million. The increase came as overall customer lending climbed by 31 per cent to £32.5 billion.

Cormac McCarthy, Ulster Bank group chief executive, said the results highlighted the bank's position as "a real alternative". He reiterated the bank's ambition to become the largest player in the Republic, ahead of AIB and Bank of Ireland.

A breakdown of the lending figures showed that loans to business customers including corporate clients grew by 33 per cent to £16.8 billion over the half.

This was slightly below the 38 per cent increase recorded for business lending by AIB earlier this week. But the figures are hard to compare directly, in part because the Ulster Bank number includes activity in the North.

"We're satisfied that we're either at the market or ahead of it," said Mr McCarthy. The growth in business lending was, he said, due to a combination of corporate lending, lending to small businesses and property loans.

In property, the bank is lending both for investments at home and to clients buying abroad.

Ulster Bank was also strong in mortgage lending over the half-year period, with advances increasing by 26 per cent to £14.2 billion.

Mr McCarthy said the growth rate was above 30 per cent in the Republic, where Ulster advances about 20 per cent of all new mortgages. "We continue to see growth in mortgage lending for both the Ulster Bank and First Active brands," he said.

Higher interest rates would be good for the property market because they would temper price growth without causing credit problems, Mr McCarthy added.

In deposits, Ulster Bank recorded a jump of 26 per cent to £17.6 billion over the half. Total bank assets climbed by 33 per cent to £40.4 billion.

Margins declined slightly but the bank said this was due to changes in its business mix.

Mr McCarthy reported "strong interest" in the bank's free current account offering, with more than 790,000 customers now using the service. "We're playing a long game here," he said.

The group will, over coming months, shift fully on to the technology platform of its parent, Royal Bank of Scotland (RBS). Mr McCarthy said this would allow for the launch of RBS products that are unavailable in Ireland.

The group has 1.7 million Irish customers across 272 branches and 32 business centres.

RBS meanwhile beat expectations with a 23 per cent rise in first-half profits as its corporate markets unit grew strongly and it kept a tight control on costs.

Britain's second-biggest bank said pretax profits in the six months to the end of June rose to £4.51 billion, above an average analyst forecast of £4.35 billion.

RBS said its charge for bad debts rose 5 per cent to £887 million in the first half. The bad debt charge in its retail markets unit rose 19 per cent to £680 million, continuing a trend among UK banks showing that consumers are struggling to pay back unsecured loans.