NATIONAL IRISH Bank (NIB) made a pretax loss of €661 million in 2009, which was described by the bank’s chief executive Andrew Healy as possibly “the worst year in Irish banking history”.

The Danish-owned bank set aside €704 million for loan losses in 2009. This brings the total provisions on the €10.3 billion loan book to 9.1 per cent, making NIB one of the most aggressive Irish banks in terms of loan writedowns.

The bank reported an operating profit (before loan losses) of €42 million, down 42 per cent. Income fell 13 per cent to €178 million.

“Our 2009 results reflect the severe economic recession and what has possibly been the worst year in Irish banking history,” said Mr Healy. “Income is down because of reduced business activity levels and higher funding costs. It’s clear the property market remains frozen and this has led us to set aside very high impairment charges.”

Mr Healy described the loan losses as “pretty grim”, though he said they declined over the year.

He expects “another tough year” for the bank in 2010.

Loan losses fell from €198 million in the first quarter of 2009, to €181 million in the second, €166 million in the third and €160 million in the last quarter of the year.

NIB made a pretax loss of €165 million in the final three months of the year, up from €155 million in the previous quarter due to restructuring costs, Mr Healy said.

The bank planned to close 25 of its 58 branches – 43 per cent of its network – by the end of 2010. The bank will reduce staff numbers by 150 or 25 per cent by mid-2011.

The bank had written down losses on 22 per cent of its commercial property loans of €3.3 billion but the bank’s €3.8 billion mortgage loans were performing better than most other lenders.

Some 1.4 per cent of these loans were in arrears, he said, which was “probably half the industry average”. Fewer than 200 customers were in arrears on mortgages for 90 days or more.

Thee bank had no plans to follow rival Permanent TSB by raising its standard variable rate on mortgages, said Mr Healy.

NIB, as a foreign-owned lender, is not joining the National Asset Management Agency (Nama). The bank would “watch carefully how it is managed”, said Mr Healy.

He said that it was “very important to have a level playing field” following any consolidation or changes in the industry as Nama becomes operational.

“Any restructuring that occurs in the Irish market has to be mindful of the foreign banks in Ireland,” he said, adding that NIB would not participate in any mergers or takeovers.

“Ours is very much an independent path – we are not planning to get into bed with any other players,” he said.

Decreasing loan losses in Ireland and the Baltic states were “a small crumb of comfort” for NIB’s parent company, Danish bank Danske, Mr Healy said.

Danske reported a profit of €173 million in the fourth quarter compared with a loss of €954 million on the same period last year.

The bank set aside €3.5 billion to cover loan losses for 2009.

Mr Healy said that the bank was “very well capitalised” with a core tier one capital ratio of 14 per cent.

Northern Bank, which is also owned by Danske, suffered record losses amounting to £100 million (€114.7 million) last year.