DANSKE-OWNED Northern Bank has posted a record pretax loss of £75 million (€87.37 million) in the North for the first half of 2009.

The bank reported an underlying profit of £35 million for the six months to June, in line with 2008 interim results. But its decision to allocate £104 million to cover potential bad debts throughout its Northern Ireland operation stripped the bank of any real profit margin.

Northern has blamed the decline in the housing market, lower demand and the turmoil in the financial markets for its disappointing performance in the first half of the year.

Northern Bank’s total income over the period under review was in the region of £100 million, down 9 per cent on 2008 interim results.

The bank pointed to a combination of lower interest rates, difficult market conditions and the depreciation of sterling for the decline in income.

Overall, Northern Bank grew its total lending by 4 per cent, which included a 15 per cent growth in mortgages, in the first half of this year. Gerry Mallon, the chief executive officer of Northern Bank, said this represents an additional £200 million commitment to the North’s economy.

According to Mr Mallon the £104 million provision for bad loans reflects the “ongoing difficulties in the property sector” and mainly covers potential liabilities in Northern Ireland. Mr Mallon said the bank’s exposure to actual losses in Northern Ireland is around £3.1 million.