Business Irish

Friday 6 December 2019

Ulster bank sets aside €192m to cope with 'legacy issues'

Gerry Mallon. Photo: INM
Gerry Mallon. Photo: INM
Ellie Donnelly

Ellie Donnelly

Ulster Bank last year set aside €192m to cope with the cost of what it said was 'legacy issues' including compensation and refunds for customers in relation to the tracker mortgages scandal.

The figure include €87m set aside in the final quarter of 2017, according to full year financial results published on Friday.

In its update today the bank said it was nearing conclusion of its discussions with the Central Bank on the issue and it hoped to be in a position to update on the final numbers of impacted customers in the near future.

In an interview with Morning Ireland today, out-going Ulster Bank CEO Gerry Mallon said that the bank could sell as much as 7,000 mortgages that are in arrears.

Adjusted operating profit at the bank was €109m, a considerable drop on the €280m reported in 2016.

However the groups operating expenses also declined during the year to €516m from €559m the prior year.

Meanwhile, the group’s adjusted income was €693m, a decrease from €701m in 2016, with the income impacted by a reduction in income on free funds.

The bank suffered an impairment loss of €68m during the year, which included a provision in relation to a change in its non-performing loan strategy to allow for potential loan portfolio sale.

During the year new lending increased by 3.4pc to €2.6bn, with €1bn in new mortgage lending to customers buying a home.

Describing the year as being one of "significant progress in many key areas with some difficult decisions in others" Mr Mallon said that the bank’s focus remained on ensuring that it is best positioned to compete and grow for the benefit of its customers, economy and shareholders, while also seeking to regain customer trust by addressing mistakes of the past.

"Consistent with the industry-wide regulatory requirement to reduce Non-Performing Loans [NPLs] we have included an impairment provision to allow for potential sales of distressed loan portfolios that are in long-term arrears and are unsustainable," Mr Mallon said.

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