Ulster Bank rebounds from €151m loss
Ulster Bank swung into a € 15 million profit in 2018 in the Republic, with the previous year's performance having been hit by large provisions for the tracker mortgage scandal and problem loans that were being prepared for sale.
The result, published on Friday, marked an improvement from a € 151 million loss booked by the Royal Bank of Scotland ( RBS) unit for 2017. Operating expenses at the bank declined to € 657 million from € 772 million a year earlier, as total income remained flat at € 689 million.
The bank's sale of a portfolio of € 1.4 billion distressed home loans to US investment firm Cerberus in the fourth quarter led to its non- performing loans ( NPLs) ratio falling to 11.3 per cent of total loans. Banks in the euro zone are under pressure from the European Central Bank ( ECB) to meet the European average, which currently stands at about 3.5 per cent.
"In 2018, we made tangible progress on our priorities to build a simpler, safer and more customer focused bank," said Jane Howard, who became Ulster Bank's chief executive last September, having previously served a senior executive at RBS in Britain.
New mortgage lending at the bank rose by 13 per cent last year to € 1.13 billion, while the level of new borrowings taken out by commercial customers was broadly flat, at € 1.4 billion.
"Our colleagues are focused on providing hep and support to our customers who are planning for possible Brexit scenarios," said Ms Howard.
Ulster Bank's 2017 results were weighed down as the bank took a € 68 million loan- loss provision against the loan book that was being set up for sale, and as it set aside € 192 million to cover refunds, compensation, and other costs related to the country's trackermortgage debacle and other incidents of overcharging.
The bank's parent, Royal Bank of Scotland, unveiled a better than expected dividend for long- suffering investors after its profit more than doubled in 2018, but warned Brexit would make it harder to achieve its cost- cutting goals.
The majority- state owned lender announced an annual dividend of 3.5 pence and a special dividend of 7.5 pence taking total payouts, including an earlier interim dividend, to 13 pence per share.
However RBS chief executive Ross McEwan warned the bank faced a difficult economic environment amid a "heightened level of uncertainty related to ongoing Brexit negotiations". The bank said the political turmoil means it will struggle to hit its target of slashing its cost to income ratio to less than 50 per cent as planned by 2020.
RBS reported a net profit of £ 1.6 billion (€ 1.81 billion), above expectations of £ 1.4 billion according to a company- provided average of analyst forecasts and up from the prior year's 752 million pounds.
The landmark dividend payout follows a painful decade of massive misconduct and restructuring costs for the bank following its £ 45 billion state rescue in 2008.
RBS's second consecutive year in the black will likely intensify speculation the Treasury will act swiftly to sell more of its stock.
The lender remains 62 per cent owned by British taxpayers, although the Conservative government has conducted two share sales as it looks to return it to private ownership.