Ulster Bank today reported a loss of £368m for 2009 according to figures from its parent bank Royal Bank of Scotland. This compares with a profit of £218m in 2008. RBS reported a net loss of £3.6bn compared with a loss of £24.3bn a year earlier.
Ulster Bank said loan losses rose from £106m to £649m as the Irish economy continued to deteriorate. More than half of the losses were taken in the final three months of 2009. Loans to customers fell by 4%, while customer deposits at the bank dipped 5%. The bank said increasing competition for deposits led to a 7% fall in its net interest income.
Customer account numbers increased by 3% during 2009, with growth fuelled by strong current account activity and new-to-bank savings customers. Non-interest income declined by 12% in constant currency terms due to lower fee income driven by reduced activity levels across all business lines.
Royal Bank of Scotland, in which the UK government has an 84% stake, said on Wednesday that the government has approved a planned bonus pool for staff at its investment banking arm. A spokesman for the bank said it received the approval from UK Financial Investments, the body that looks after the government's holdings in RBS as well as Lloyds Banking Group. The planned bonus payout is estimated to be around £1.3bn.
Bloomberg reported that RBS set aside 27% of revenue for pay and bonuses for investment bankers in 2009. Barclays Capital, the investment banking unit of Barclays Plc, paid 38% of revenue, while Goldman Sachs Group paid 36%.
Core RBS business 2009 operating profit rose 89% to £8.3bn.
RBS said impairments on bad debt rose “sharply” to £13.9bn.
Operating profit at the investment bank was £6.35bn compared with a loss of £1.27bn in 2008.
Non-interest income increased to £15.8bn from £4.8bn in 2008, largely reflecting the sharp improvement in income from trading activities.
The loan:deposit ratio (net of provisions) has improved to 135%, as loans to customers
Stephen Hester, Group Chief Executive, commented: “We are one year into our five-year turnaround plan and have taken significant steps along the path to recovery. The strengths of our Core business are becoming clearer, while the legacy of losses and exposures from the crisis is running off. RBS is being restructured and run to serve customers well, to be safe and stable and to restore sustainable shareholder value for all. That is our legal duty and it is our intention and desire. It is also the only way taxpayers will recover the support they have given us.
“We have exceeded all the principal milestones we set for the first year of our plan. An £8.3 billion profit for 2009 in our Core businesses provides evidence that the new RBS can deliver sustainable earnings. RBS is also becoming safer and smaller more quickly than we expected. We have already completed 70% of our planned balance sheet reduction. Most importantly, our customer base remains loyal as we implement the changes to our business.
“In 2010, we will continue to focus on the recovery factors we can control, while effectively navigating the factors we cannot. The case for investment in our Group will become simpler and clearer as our strategy and actions show continuing results.”
Results detail
