Northern Bank Losses Revealed

A second local banking institution has reported a big loss.

The Northern Bank is down £69m in the first six months of 2009 in news that follows similar grim data released by the Ulster Bank earlier this month.

As with the Ulster Bank, the Northern made an operating profit of £35m over the period, but similarly had to set aside substantial funds - in this case £104m - to cover loans it thinks might not be repaid.

Chief Executive Gerry Mallon told BBC Radio Ulster "ongoing difficulties in the property sector" reflected the amount they have set aside for potential bad debt.

However, he said actual loan losses so far remain low at around £3m and the bank is well capitalised.

The underlying profit was level with the same period in 2008.

Total income of £100m was down 9% on 2008, reflecting lower interest rates and reduced activity in the market.

Lending grew by 4%, including a 15% growth in mortgages. Deposits remained stable.

Operating expenses fell by 5% which Mr Mallon said was due to "continued focus on efficiencies."

In general terms, the bank forecasts that the Northern Ireland economy will shrink by about 2.4% in 2009.

The bank was acquired by the Danske Bank Group in 2005, the largest bank in Denmark and a major player in Scandinavian financial markets.

It has 88 branches in Northern Ireland employing 1,275 people.

Danske's unit in the Republic of Ireland, National Irish Bank, reported a loss of €341m for the first half of 2009 after setting aside €379m for loans it thinks might not be repaid.

See: Job Cuts As Ulster Bank Makes Losses

(BMcC/KMcA)