Lloyds' Irish unit BoSI has 44pc 'bad' loans
ALMOST 44pc of Bank of Scotland (Ireland)'s entire loan book is now classified as "impaired" after the embattled bank took another £1.56bn (€1.88bn) in loan losses over the half-year to June.
The hefty impairments are revealed in stock market filings from BoSI's owner, Lloyds, and mark a considerable deterioration from the 33pc impairment rate at the end of 2009.
But a spokesman for the Irish unit yesterday insisted the figures were "moving in the right direction" since the impairments booked for the six months to June were less than comparable figures for the second half of 2009.
BoSI's first-half loan losses were more than 50pc worse than the £1.027bn booked in the first half of 2009, but were an 18pc improvement on the £1.922m recorded in the latter half of 2009, the filings show.
The BoSI spokesman declined to forecast whether the "improvement" would continue into the second half of the year.
In its stock market announcement, bailed-out Lloyds said it expected "further reductions" in loan losses throughout the Wealth and International division, which BoSI slots into.
The commentary stressed, however, that economic conditions "continue to be monitored closely, particularly in Ireland".
BoSI accounts for just under half the Wealth and International's £55.6bn loan book, but the Irish bank was responsible for 70pc of the division's £2.23bn first-half loan losses.
Commenting on the 62pc increase in Wealth and International's half-year losses, Lloyds blamed "higher impairment levels, primarily in Ireland".
"Economic conditions remain challenging with further falls evident in commercial and residential property prices whilst unemployment levels continue to rise," Lloyds noted, adding that a "lack of liquidity" was continuing to hinder the Irish real estate market.
BoSI racked up losses of €3bn in the Irish market last year and closed down its 44-branch retail network in a bid to stem the haemorrhage.
The bank's spokesman yesterday said BoSI remained "committed to supporting our Irish customers" despite the latest loan losses.
The latest figures show, however, that BoSI's loan book is gradually shrinking, with £26.7bn out to customers at the end of June against the £29.1bn out on loan six months earlier.
The continued high loan losses in BoSI's Irish book is in stark contrast to the return to the overall Lloyds group, which bounced back to profit in the half year, with expectation-beating earnings of £1.6bn.
The performance was strikingly better than the £4bn in losses reported for the first half of 2009, and came as group-wide loan losses shrank from £13.4bn to £6.55bn.
"Despite the challenging environment, the core businesses performed strongly and we continued to see positive momentum across all of the key income statement line items," said chief executive Eric Daniels.