LOAN IMPAIRMENTS at National Irish Bank (NIB) fell in the first three months of 2010, but remain at a high level, the Danish-owned bank has reported.
In a first-quarter trading update, NIB said it set aside €146 million for losses on its bad loans, down €52 million on the same period in 2009.
NIB said operating profits for the first quarter amounted to €13 million before loan write-offs are taken into account, down 38 per cent on last year. Income fell 19 per cent to €42 million.
“Economic and trading conditions continue to be very difficult and the banking sector is going though dramatic change,” said NIB chief executive Andrew Healy.
“While our loan impairments continue to trend downwards, they remain high,” he said.
Danske Bank’s Irish operations gave rise to a quarter of the group’s impairment charges, despite representing just 5 per cent of its loan book.
The Danish banking group as a whole reported a pretax profit of €187 million for the first quarter, down 40 per cent. A total of €574 million was set aside for loan impairment charges.
Losses on commercial property loans at NIB have fallen over each of the last four quarters, while Kevin Gallen, NIB deputy chief executive, said the bank remained cautious about signs of stabilisation in its property valuations.
The quality of NIB’s €3.7 billion loan book remains good, with borrowers keeping on track with repayments, the bank said.
During the housing boom, NIB restricted its loan offer to mortgage switchers who provided a minimum of 20 per cent of the property value as a deposit.
“That strategy from a quality point of view has worked well for us. We are pleased with how the residential mortgage book is holding up,” said Mr Gallen.
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 three of the 25 branches earmarked for closure have shut down.
Mr Gallen said the bank would invest in the 33 branches set to remain open. Staff numbers will reduce by 150 – or 25 per cent – by mid-2011.
