Ulster bank reported a small profit margin of €15 million in 2018 for the Republic of Ireland and a €51 million profit for Northern Ireland as they also announced the possibility of the future sale of nonperforming loans. The banks nonperforming loans make up more than 10% of all loans held by the bank and it is hoped a sale of some of these to vulture funds will help increase its profitability for 2019.

Sale of loans in the Republic

A spokesperson for the bank stated that any future sale of Ulster bank loans will mostly be private mortgage cases. These they said will be looked at on a case by case basis noted the irish Examiner. However, any future sale may be hampered by political manoeuvring in Dublin.

A spokesperson for the bank said that they are aiming to reduce the number of non-performing loans to around the 5% mark by the end of 2019.

As the ECB continues to mount pressure on banks to reduce the levels of nonperforming loans from the time of the recession it is almost a certainty that other banks will make similar announcements throughout the year.

As we have already stated, any future sale may be impacted by legislation being brought forward by Sinn Fein. Known as the “No Consent, No Sale” bill, this bill aims to factor in a customers rights in regard to the sale of mortgage loans to vulture funds.

To further underpin the necessity of selling the loans, Spokesperson Ms.Howard has talked of the uncertainty of Brexit and how some companies have been reluctant to commit to further investment and borrowings from the bank, making profitability more difficult.

Ms.Howard said that although the bank is training staff to guide customers though Brexit uncertainty, most of the banks employees are still working through soured loans and mortgages. A sale of some of these laons would free up staff to deal with the implications of Brexit.

Northern Ireland Profits

Meanwhile, in Northern Ireland, profits of £51 million were reported, down on 2017’s £59m, however, last year’s figures were as the result of write-backs from bad loans reported RTE.

Write-backs refer to money set aside for expected losses namely in regards to such things as the nonperforming loans discussed above.

Richard Donnan, head of the bank in Northern Ireland, said that the figures show an overall increase in profits of 80% over the last two years. 

Similar to TSB merger gossip, Mr.Donnan also announced that there would be no closures of bank branches across Northern Ireland. This is something which had been reported on by a number of papers throughout the week.

As with most services now, the bank’s customers have also taken to digital services quite enthusiastically with an increase of use of over 45% in the past year.

Like other Northern Ireland banks, Ulster bank has had to close many of its branches in recent years and now has 44.

To underpin the need for staff Mr.Donnan discussed the re-training of staff to deal with customer queries that related to issues which customers cannot do online. Highlighting the fact that closures are not in the banks futurre plans at the moment.

As with its partner in Northern Ireland, Ulster bank is beginning to feel the impact of uncertainty from Brexit with investments and loan applications being smaller than expected.

Similar to reports from the Republic, spokespeople from the bank noted the cautionary progress of businesses and the stockpiling of raw materials and products by businesses in Northern Ireland. It was already reported in other publications this week that drinks company Barclays was stockpiling alcohol in the event of a hard Brexit.

Permanent TSB merger

In a week of announcements and profit sharing news, one story which was rubbished by spokespeople for the company was the case of a merger between Permanent TSB and Ulster Bank. Rumours had been circulating in recent weeks that this could be a possibility.

However, as Ms.Howard made announcements regarding the future of the bank in the Republic of Ireland it was made clear that no talks whatsoever have taken peace about the possibility of a merger.

Although some analyst and industry professionals discussed the implications of a merger on the profitability of both companies, Ms. Howard said that she did not see any reason for the combining of the companies.

The small profit margin announced by the bank also did not help quell rumours as it showed such a low ROI for investors. However looking at the books, Permanent TSB could potentially be a hinderance for Ulster bank should a merger ever occur.

So with announcements both North and South of the border, Brexit once again took up most of the mantle, but at least reports from both sides showed an increase in profitability.