ULSTER BANK has reported an operating loss of £137 million for the first quarter of 2010 as the number of mortgage customers defaulting on their mortgages increased.
The bank’s loss was an improvement on the £275 million it recorded in the final quarter of last year. The main driver was a lower impairment charge of £218 million for the first three months of this year, compared with a charge of £348 million in the fourth quarter of 2009.
The bulk of Ulster Bank’s impairments came from its commercial property lending and other corporate loans. However, losses on bad mortgage loans rose to £33 million.
Ulster Bank blamed the impact of cuts in the December budget and higher unemployment, which it said had “increased pressure on customers’ ability to repay”.
Mortgage impairments at the bank have more than doubled over the past year.
Ulster Bank chief executive Cormac McCarthy said market conditions were still “extremely challenging”.
But he added that an increase in the operating profits it achieved before impairment losses are taken into account showed that actions taken by the bank over the past 18 months were having a positive impact. Operating profits before impairment losses rose to £81 million, up from £71 million a year earlier.
“Despite prevailing conditions, we continue to see opportunities for new business and growth in customer numbers. We remain committed to serving the needs of our 1.9 million customers across the island of Ireland,” Mr McCarthy said.
The figures were included in the results of Ulster Bank’s parent, Royal Bank of Scotland (RBS). The group beat analysts’ expectations with a return to profit in the first quarter as its bad debts continued to shrink.
NCB Stockbrokers banking analyst Ciarán Callaghan said UIster Bank’s performance continued to be affected by pressure on its margins due to high funding costs and limited repricing of assets.
“On a positive note, its share of the Irish current account market is rising as it exploits the retrenchment of other foreign competitors,” Mr Callaghan said.
