Ulster Bank poised for expansion as half year profit jumps 21% to £99m

Ulster Bank will move aggressively to expand its operations, group chief executive Mr Martin Wilson said yesterday, when he announced a 21 per cent rise in pre-tax profits to €156 million (£98.8 million sterling) for the six months to end June.

But the bank, which was taken over by The Royal Bank of Scotland in March, did not reveal its liability to Deposit Interest Retention Tax (DIRT), interest and penalties arising out of the Revenue Commissioners audit of the financial institutions in the Republic.

Chief executive for corporate banking, Mr John McNally, said the bank was in negotiations with the Revenue to determine its liability. "We hope to conclude it quickly," he said declining to discuss the size of the settlement.

Ulster would expand by acquisition and through organic growth, Mr McNally said. "We want to grow our market. To do this we will invest in our own business and we will be acquisitive when the opportunity presents," he said.

Targeted for expansion are wealth management services and the small and medium sized business market. The bank is investing to build on its existing Internet capabilities, he said.

In the Republic Ulster is restructuring its 121-branch operation to refocus its sales effort by segmenting its customer groups. "Branches in some larger locations will be reconfigured to develop dedicated business branches and dedicated personal branches. In smaller locations there will be changes in the way branches are organised to focus more on the different customer needs," he said.

No branch closures are planned - Ulster has closed about 5 of its 209 sub offices because they were not economic, he said. On acquisitions, he said the bank was not in any discussions but it was "acquisition minded". Some 60 per cent of the first half profits came from the Republic with the balance from Northern Ireland. The results include a profit of £4.4 million sterling from the sale of Ulster Bank Investment Services. When this exceptional profit is stripped out, operating profits were 16 per cent ahead at £94.4 million.

Ulster said the impact of a weaker euro - through the translation of earnings from the Republic into sterling - depressed the outcome. On a constant currency basis operating profit would have shown a 23 per cent rise. Group income was 11 per cent ahead at £228 million sterling. Growth in lending volumes, with a 18 per cent rise in total loans to almost £7 billion sterling, helped to push net interest income up five per cent to £139.5 million sterling.

In the buoyant Irish economy lending growth was stronger than in Northern Ireland. Business lending rose by 35 per cent in the Republic compared with 12 per cent in Northern Ireland, personal loans were 34 per cent ahead compared with 24 per cent, while mortgages were up 27 per cent compared with a 22 per cent rise in Northern Ireland.

Increased sales of savings and investment products, stockbroking and treasury income boosted non-interest income by 22 per cent to £83.8 million sterling. At the end of June group customer balances - mainly savings accounts - were 9 per cent higher at £6.9 billion.