National Irish Bank has reported a pre-tax loss of €552m for last year, after setting aside €228m to cover likely losses from bad loans.
The figures also include a once-off write-off of €395m in the value of NIB by its Danish parent bank Danske Bank, which paid €1.4 billion for NIB and Northern Bank four years ago.
Excluding these charges, profits rose 144% to €71m.
NIB CEO Andrew Healy said the bank had taken a 'severe and negative view' of the likely bad debts in the commercial property sector. He said the bank currently had loans of €3.5 billion in this sector, out of a total loan book of €10.7 billion. Mr Healy added that NIB was 'working closely' with its customers to keep these bad debts down.
He said the amount of loan losses from its residential mortgages, which account for almost 40% of loans, was small.
Mr Healy said NIB had cut costs by 12% last year and planned a further 10% reduction this year, but had no plans at the moment to seek lay-offs.
Danske Bank's CEO Peter Straarup said NIB's performance matched expectations up to last Autumn, but no-one had anticipated the depth and speed of the recession in Ireland. He said it was appropriate to write down its valuation of NIB as the growth assumptions it made in 2005 were 'clearly no longer valid'. But Mr Straarup said this did not alter its commitment to Ireland and NIB.
