Ulster Bank profit jumps as conduct and litigation costs drop

Operating profit rose to £54m in first nine months of the year

Ulster Bank’s operating profit jumped in the first nine months of the year in the Republic as its conduct and litigation costs, including its exposure to the tracker mortgage scandal, declined.

Operating profit rose to £54 million (€62.7 million) from £10 million in the same period last year, the lender's UK parent, Royal Bank of Scotland, said in a trading update on Thursday.

Ulster Bank, which has had to ringfence the equivalent of £269 million in recent years to deal with the tracker-mortgage debacle and £144 million for other overcharging and legacy issues, took an additional £21 million litigation and conduct charge in the first nine months of this year.

Still, that was down from £54 million for the corresponding period in 2018.


Net interest income at Ulster Bank shrank to £302 million from £334 million, as its net interest margin – the difference between the average rates at which it funds itself and lends to customers – contracted to 1.6 per cent from 1.81 per cent and the size of its loan book declined by £200 million to £19 billion.

Ulster Bank chief executive Jane Howard told The Irish Times in an interview last month that the bank was planning a fresh round of job cuts at the group as it sought to rein in costs as ultra-low European Central Bank interest rates squeezed lending margins.

Reduce expenses

Ms Howard said her executive team “will look across the whole organisation” to reduce expenses, as it worked to simplify its processes and took greater advantage of its parent’s technology. She declined to give a figure of how many jobs could be cut, or a timeframe.

The bank has since eliminated more than 1,000 roles as the size of its balance sheet has shrunk by half, leaving it with an average of 2,368 staff and 247 temporary employees at the end of last year.

Ulster Bank has agreed earlier this month to sell €800 million of mortgages, mainly issued on family homes, to US distressed debt specialist CarVal Investors.

Pepper Finance Corporation (Ireland) DAC will become the legal owner and servicer of the mortgages.

The Dublin-based bank, which required a £15.3 billion bailout from RBS during the financial crisis, has seen the size of its balance sheet fall by more than 50 per cent to £26.1 billion over the past decade as a sell-off of commercial real-estate loans earlier this decade was followed in recent times by mortgage disposals.

Meanwhile, RBS, which will see new chief executive Alison Rose take charge at the end of next week, reported an £8 million pretax loss for the three months to the end of September, compared with a £961 million profit for the same time last year. It came as the group booked an additional £900 million charge for its role in the UK’s long-running payment protection insurance mis-selling debacle.

This article was edited to correct an earlier report that said Ulster Bank's profits fell in the first nine months

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times