Ulster Bank arrears fall as house prices rise
Rising residential house prices and debt management have resulted in lower arrears at Ulster Bank.
Parent group Royal Bank of Scotland (RBS) said loan losses this year in its Irish division will be €300m less than previously thought. The bank has made the so called “write back” thanks to a bounce back in property values and a reversal of mortgage arrears.
There is room for “further releases in future if market conditions continue to improve,” according to RBS.
Analysts at Goodbody estimate the lender will generate profits of £500m (€641m) by the end of the decade, with returns on equity in the low-teens, which may explain RBS’s willingness to retain the franchise.
Overall RBS said stronger economic conditions are boosting its recovery after it cut the amount of money it is setting aside to cover bad loans.
In an unscheduled trading update, the British taxpayer-backed bank said it expects to significantly beat its previous guidance for around £1bn of loan impairments in the current financial year.
This has been driven by improved performances at Ulster Bank and RBS Capital Resolution, which contains the bank's troublesome assets.
However, the bank warned it still faced many bumps on the road to recovery, particularly relating to conduct and litigation matters.
RBS will release a fuller update on October 31.