Barclays in Ireland avoids worst of the crash with jump in profit
Published 13/08/2011 | 05:00
Barclays in Ireland has reported another strong rise in profits after avoiding the worst of the property crash here.
The bank has posted a €20m profit for 2010 and has grown its Irish asset base to €2bn, with the company now sitting on shareholders' funds of €221m.
Unlike other foreign lenders, Barclays exposure to the property market was minimal and it halted its property lending in Ireland before the crash.
The bank has one of the strongest balance sheets in the Irish banking industry with no reliance on wholesale funding to fund customer loans, the accounts state. The profits, up from €2.8m, exceeded management expectations, although there were impairment charges of €6.3m.
The bank carries out a range of business activities in Ireland, but does not do direct retail banking. It does underwriting, debt placements and treasury services, while also lending to mainly export-orientated and multinational firms.
The Dublin-headquartered bank is also involved as a partner in public private partnerships (PPPs) in Ireland.
The bank claims it credit policies have insulated it from trouble in Ireland.
"The bank has a proactive approach to early and active management of early-warning-list customers and as a result is very close to events at companies that are encountering trading difficulties".
Bad debts (known as impairments) were down from €21.4m to €6.3m. The bank is able to tap into the reserves of Barclays Group Treasury if needed.
Barclays received much of its capital in 2005 when its parent put €121m into the Irish operation. The bank now has tier-one capital of €221m, giving it a regulatory capital ratio of 16pc, when the regulator only needs 8pc.
One of the benefits the Irish operation does have -- which bolstered the results -- is that it can place deposits with its parent.
"One of the drivers of the 13pc increase in net interest income was the securing of improved rates from Barclays Bank for funds deposited with our parent bank," state the results.
The Irish bank's balance sheet has grown from €1.5bn to €2bn during the year, a rise of 33pc. Loans and advances to banks was a major contributor to this, although the amount of financial assets piled up by the bank also grew.
There was a huge growth of deposits at the bank during the year, going from €870m to €1.2bn. Deposits by banks also grew. The bank has outstanding commitments to lend new money to customers totalling €369m.
Andrew Hastings, a former executive with French lender BNP Paribas, has taken over as chief executive at the Irish bank.