National Irish Bank has reported a net loss of €49m for the nine months ending September 2008. This compares with a profit of €11m the same time last year and the bank says that conditions in local and international financial markets are unprecedented.
The bank, owned by Denmark's Danske Bank, said its loan impairment charges increased to €94m. NIB said this reflected the very sharp downturn in economic and market conditions and said that those conditions were set to continue.
The bank said that most of the loan impairment charges related to provisions while actual loan write-offs amounted to €3.9m or 0.05% of average loans.
NIB said that its income in the nine month period increased by 9% to €145m while costs reduced by 12% to €100m. Total lending rose by 17% with mortgage lending up by 20%. Customer deposits rose by 10% in the nine month period.
'The Irish economy's decline has accelerated over recent months and the outlook for the next 18 months is not good,' commented Andrew Healy, NIB's chief executive.
'That is the reality and we have therefore taken a substantial increase in loan impairment charges during the quarter. As part of the Danske Bank Group, we adopt a prudent and proactive approach to loan impairment charges,' he added.
NIB said its loan book amounted to €10.5 billion at the end of September. The bank focuses on the switcher mortgage market and has a15% share in this area. About 37% of this is residential mortgages with an average loan to value ratio of below 55%.
The bank says it considers it has one of the lowest risk mortgage books on the Irish market with mortgage arrears currently standing at less than 100.
Its exposure to property development and construction is about 16% of the total lending book and the bank has had a cap on this area of lending since late 2006.
Meanwhile, Danske Bank said its pre-tax profits fell by 38% to €1.3 billion with loan impairment charges standing at €388m or 0.33% of average loans.
