NORTHERN BANK reduced its provision for bad debts during the first three months of 2010, helping it realise pretax profits of £1.6 million for the period.

It marks a significant year-on-year improvement for Danske Bank’s subsidiary in the North, which last year posted impairment charges of £55 million for the first quarter of 2009. Latest financial results show Northern reduced its bad debt provision in the first quarter of this year to £14.4 million.

The bank, which has 83 branches in Northern Ireland, said its actual write-offs between January and the end of March had remained low at £2.5 million.

Northern said its income levels had also been “largely maintained in difficult economic conditions”. The bank reported total income of £47.1 million for the first quarter of this year. Operating profit before impairment charges was £16 million.

The quarterly figures show the bank’s overall lending volumes remained broadly unchanged from quarter four of last year. Deposit volumes were also stable despite the local economic conditions.

Chief executive Gerry Mallon believes the “road to recovery remains fragile” in the North. But he is more upbeat about the prospects for this year compared to the challenges this time last year.

“Northern Bank is very much open for business and we are well placed to support businesses and consumers to maximise the opportunities that emerge as the economic recovery strengthens,” Mr Mallon said.

In its interim report for the first quarter, parent Danske Bank said it expected to see house prices fall further in Northern Ireland this year. However, the Danish banking group has welcomed the “downward trend” in loan impairment charges and sees some upside to the composition of the local economy.

“The region is hit hard by recession, but the public sector has helped stabilise the economy,” it stated.