Thursday 14 December 2017

Ulster Bank to boost lending by a third despite Central Bank's clampdown on homeloans

The headquarters of Ulster Bank in Dublin
The headquarters of Ulster Bank in Dublin
Donal O'Donovan

Donal O'Donovan

Ulster Bank wants to boost mortgage lending this year despite new strict lending curbs by the Central Bank. The forecast follows a 41pc rise in home loan drawdowns in 2014.

The country's third biggest bank reported its first full-year profit since the start of the financial crisis yesterday, and said it plans to boost overall lending by a third in 2015.

"Ulster Bank has obviously had a very good year, it is the first profit since 2008, momentum in core business has built up during the year," Ulster's chief executive Jim Brown told the Irish Independent.

Businesses lending grew 46pc last year to £1.1bn (€1.5bn) and consumer lending, mainly for home loans, rose 41pc to £700m (€964m), he said.

Lending on the island of Ireland will increase to £2.4bn (€3.3bn) in 2015, Mr Brown said.

Ulster Bank raised concerns last year during public consultations on the Central Bank plan to limit mortgages to 80pc of the value of a property and 3.5 times household income.

Mr Brown said he was pleased that allowances will be made for first-time buyers and those in negative equity when the new rules came into force this month.

There has been "no significant slowdown" since the new rules came in and the bank believes lending will rise again this year.

"More marginal people (who apply for mortgages) will be affected - no doubt - but I expect that percentage to be relatively modest," he said. The bank made an operating profit of €752m for 2014, according to its full-year results - it made a loss of €1.7bn in 2013. The bank also reduced its operating expenses by €130m. Mortgage arrears remain a big issue.

The return to profit has bolstered Ulster Bank's status with the wider Royal Bank of Scotland (RBS) group, following years of losses at the Irish unit.

RBS reported a 2014 loss of £3.5bn hit by a write-down on the value of its US business Citizens and new charges relating to foreign exchange investigations and mis-selling.

Last year RBS chief Ross McEwan announced that Ulster Bank would be retained within the UK parent group following a lengthy review, a decision understood to be linked to the return to profit. In contrast, UK state-controlled RBS said yesterday that it will shrink its once vast investment banking operations, pulling out of 25 countries to focus on core markets, especially the UK.

Irish Independent

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