Danske Bank making £2m a week profit while Ulster Bank parent RBS puts brakes on its losses
DANSKE Bank in Northern Ireland made a pre-tax profit of £27.3 million in the first three months of this year - equivalent to more than £2m a week.
That's down on the figure of £35 million in the first quarter of 2016, and is attributed to the negative impact of the lower interest rate as well as higher costs associated with the implementation of Danske's investment programme.
But Danske's core underlying business continues to perform strongly, with strong growth in both customer lending and deposit volumes.
Danske's net credit in loan impairments of £7.1m was down from £8.6m in the corresponding 2016 period, which it says reflects the continuing recovery in property values and in the trading results of the bank’s business customers.
And the bank continues to have a strong capacity to support new lending, underline by a loan to deposit ratio of 75 per cent at March 31.
Chief executive Kevin Kingston, said: “I'm pleased to report such a healthy profit before tax for the first quarter and the underlying performance of our business remains strong, with lending up 7 per cent year-on-year.
“Our successful mortgage product offering helped us to drive significant new mortgage business in quarter one, resulting in a 73 per cent uplift in mortgage lending compared to the same period last year.
“We saw a 26 per cent year-on-year increase in the amount of new personal current accounts being opened, with many of these customers opting to take up our reward-based current account."
Danske's lending to the small business sector over the quarter was up 42 per cent year-on-year, with 35 new small business relationships being established every week. In the medium to larger-sized businesses, lending is also up 26 per cent.
Kingston added: “Among larger organisations the uncertainty we witnessed in the months after the EU referendum seems to be starting to dissipate.
"Importing companies are managing their risk in the face of rising inflation, while exporting companies are continuing to take advantage of current exchange rates. We helped to support multiple corporate investments in quarter one, including, significantly, the long-term refinancing of Titanic Quarter."
Meanwhile Ulster Bank's parent firm Royal Bank of Scotland has swung back into the black, reporting its first quarterly profit since 2015.
The taxpayer-owned lender booked a £259 million profit in the first three months of the year, compared with a £968 million loss in the same quarter last year.
It is the first time since the third quarter of 2015 that RBS, which is 72 per cent owned by the Government, has turned a quarterly profit.
The numbers will come as welcome relief to chief executive Ross McEwan, who has presided over a string of recent poor results, which tally up to a staggering £58 billion of losses since RBS was bailed out by the Government at the height of the financial crisis.
He said: "These results reflect very much what we talked about at full year.
"This bank has a very strong core with great potential, and we believe that, by going further on cost reduction and faster on digital transformation, we will deliver a simpler, safer and even more customer-focused bank, with a compelling investment case."
The core bank's adjusted operating profit also rose in the quarter, from £303 million to £1.3 billion. The figures also show that RBS booked £577 million in restructuring costs.
In February, RBS reported a £7 billion annual loss and Mr McEwan ordered a £2 billion four-year cost-cutting drive, expected to result in significant job losses and branch closures.
To this end, the bank took £278 million in costs out of the business in the period.
Last week, Chancellor Philip Hammond made the stark admission that the government is prepared to sell its stake at a loss to the public purse.
The government bought its 72 per cent stake in the bank for £45 billion in 2008, at £5.02 a share, as part of a bailout at the height of the financial crisis.