BANK OF Scotland (Ireland) made a loss of €250 million for 2008, bringing to an end 15 years of growth for the bank here.

The bank, which is owned by the Lloyds Banking Group, also took a hefty €553 million impairment charge relating to its Irish property loan book – a near 17-fold increase on the 2007 bad debt charge.

This represents 1.79 per cent of average advances and relatively speaking is a higher charge than that booked by either AIB or Bank of Ireland recently. It compares with an impairment charge of €32 million in 2007, which was just 0.12 per cent of its average loans to customers and reflects the changed economic times here.

The bank made a profit before the impairment of €303 million, the same level as in 2007.

Mark Duffy, the bank’s soon-to-depart chief executive, did not seek to put a gloss on the figures.

“The results are disappointing but they are not unexpected,” he said. “The market is bad and there is no point in codding ourselves.”

Mr Duffy said the bank had taken “a more conservative approach” to its bad debt provisioning than many other banks but “made no apology for that”.

He said the property impairments reflected the “state of our customers”, adding that the sector “was in an appalling state”.

About 28 per cent of the bank’s loan book is residential mortgages with 29 per cent in construction and property development. Both of these are under severe pressure as a result of the recession.

While advances to customers rose by 8 per cent to €32.1 billion, its deposits declined by 32 per cent to €6.6 billion.

The bank said this reflected “significant outflows caused by uncertainty prior to the announcement of the Lloyds TSB acquisition of HBOS and the Irish Government guarantee scheme”.

It added that its deposit base was “significantly enhanced” in the final quarter of 2008 following its decision not to join the Government guarantee scheme.

Bank of Scotland Ireland also confirmed that it received a cash injection of €750 million from Lloyds in December.

Its core tier one ratio – the key measure of a bank’s ability to absorb unforeseen losses – improved to 7.5 per cent from 7.1 per cent. “We believe that we were appropriately provided for at the year end,” Tom Fitzgerald, the bank’s chief financial officer, said.

Mr Duffy said the bank had no plans to reduce its 1,600-strong workforce in Ireland.

Halifax, which is part of Bank of Scotland Ireland, will shortly open three more retail branches to bring it to its launch target level of 43.

He said no bonuses were paid to executives in 2008 and none would be paid this year. There would also be no pay increase this year.

Mr Duffy declined to say how much was paid to executives in 2008.

The bank achieved net interest income of €523 million last year, up from €482 million in 2007.

Its operating expenses declined by 9 per cent to €206 million.