Mortgage crisis hits home at Ulster as loan losses soar
Published 05/11/2011 | 05:00
THE worsening mortgage crisis was the most dominant feature in Ulster Bank's third-quarter results, as the bank almost doubled its home-loan impairments.
The stark mortgages trend was revealed in regulatory filings from parent company RBS, which showed embattled Ulster's operating losses jumped 24pc to £219m (€254m).
In a gloomy results commentary, RBS noted that Ulster's performance "continues to be overshadowed by the challenging economic climate in Ireland". The bank is attempting to defray the rising losses by reviewing costs cuts. Larry Broderick, head of bank workers' union the IBOA, yesterday said job losses "now seem to be on the agenda".
Yesterday's results show Ulster's staff expenses rose £1m to £55m between the third quarter of 2010 and the third quarter of 2011, a tiny amount compared to the scale of the bank's losses. Mortgages were the worst culprit, as impairments on Ulster's £20.7bn book rose from £69m in the 2010 period to £126m in the quarter to September. The most recent period was also up some 60pc on impairments booked in the three months to June, suggesting a marked deterioration of late.
Other banks have also noted a worsening of their mortgage books over the summer months, and Bank of Ireland's interim management statement next week will be closely watched for signs of this.
Beyond mortgages, 'other corporate' also suffered an acceleration of impairments, with provisions of £111m booked in the quarter to September, up from £100m a year earlier.
Property impairments at £78m were lower than their £107m level a year earlier, but were higher than the £69m in the third quarter of 2010.
The worse performance at Ulster's main business was in stark contrast to improved impairments at the £15bn of 'non-core' assets being wound down in a separate unit.
That book recorded impairments of just £283m in the three months to September, sharply better than the £689m of losses a year earlier and the £982m hit in the three months to June. The biggest improvement was in the £8.7bn development book, where impairments fell from £810m in the second quarter to just £162m in the latest period.
"Progress has been made to identify growth opportunities in the Irish market over the medium term," RBS noted.
While several foreign lenders, most notably Lloyds-owned Bank of Scotland (Ireland), have pulled out of the Irish market, Ulster has insisted it is here for the long-run.