Ulster Bank has reported a strong performance in the first half of 2002 and, while economic activity has slowed, the bank is confident it will deliver a solid outturn this year.
The bank, which is part of Edinburgh-based Royal Bank of Scotland, posted a 9 per cent rise in pre-tax profits to €201 million on the back of good growth in its core banking activities in Ireland.
Ulster Bank chief executive Mr Martin Wilson said lending in the mortgage sector and to small and medium-sized businesses had remained buoyant throughout the first half of 2002. "A slowdown in the Republic has impacted on the level of activity but we anticipate that the second half of this year will be stronger by quite a way, assuming there are no major international shocks."
The bank generated €265 million from interest earned on its lending and deposit-taking activities. This was boosted by €148 million in income earned in fees and other revenues across the bank's branch network.
Its costs increased during the six months with staff costs rising by 6 per cent to €111 million. Much of this is due to the implementation of a restructuring programme throughout Ulster Bank, which has included a switch to more incentive-based pay structures as well as a voluntary severance scheme. Mr Wilson said the costs associated with this transition were reflected in the higher staff costs. Some 400 staff are due to depart the bank as part of the scheme this year, while about 300 will be recruited to new positions within Ulster Bank.
The bank also incurred higher costs associated with the rental of new premises and equipment. These other costs rose by 13 per cent to €83 million.
The bank has raised its provisions for bad debts to €18 million, some €8 million higher than in the same period last year. Mr Wilson said the increased provisions reflected a small number of specific situations. He said the quality of its loan book remained very high and, even with the latest increase, the bank's provisions for bad debts were at historically low levels.
Customer deposits increased to €12.5 million and total assets rose to €17.9 million.
Mr Wilson said the bank would continue to focus on the small business sector and leveraging Royal Bank products into Ulster Bank.
Royal Bank reported a 15 per cent rise in pre-tax profits to £3.2 billion sterling (€5 billion), ahead of market expectations on the back of growth across all of its businesses. The group has declared an interim dividend of 12.7p per share, up 15 per cent. Earnings per share climbed by 12 per cent to 69.8p.
Royal Bank of Scotland chairman Sir George Mathewson said the bank anticipated continuing its cautious stance in the short term. "The strength, diversity and flexibility of our group enables us to adopt a cautious stance relative to market conditions, while still being able to deliver superior products and services, which customers want and need."
