The Ulster Bank group has reported a 76% slump in operating profits as the deterioration in global and local market conditions impacted its performance.
Ulster Bank said that operating profits fell to £117m sterling (€147m) while total income decreased by 2% to £1.269 billion. Average loans and advances to customers were up 9% to £60 billion.
The bank's impairment losses rose to £394m, which it said reflected the impact on credit quality due to the slowdown in the Irish economy. It said it saw a significantly increased flow of cases into the 'problem debt management process'.
Ulster Bank said that new mortgage volumes in the second half of the year were much lower than in the first six months. It added that its average mortgage balances were 11% higher than in 2007.
It said that deposit balances were largely flat year on year due to the competitive market in Ireland, but added that deposit flows in Ulster Bank were strong in the late part of the year. It said it opened 119,000 new current accounts last year.
Last month, Ulster Bank's parent group RBS announced that the bank was to absorb the business of First Active, with the loss of 750 jobs.
'We continue to trade profitably and have been clearly identified as a core part of RBS, following the publication today of RBS Group's annual results for 2008, ' commented Ulster Bank Group's CEO Cormac McCarthy.
'A number of steps have been taken to adapt our business, including the recent announcement of our move to a single brand strategy, which will see First Active merge with Ulster Bank in late 2009,' he added.
'These actions are designed to strengthen our organisation, to consolidate its all-Ireland reach and to position the business to deal best with the prevailing local and global market conditions,' he concluded.
Speaking on RTÉ radio this morning, Mr McCarthy said that the next couple of years would be difficult for the banking industry both locally and globally.
'I think it is going to be extremely difficult. There are plenty of grounds for pessimism but one has to be optimistic,' he said.
'Downturns are followed by upturns, it will come; when and how I can't say but what we have done in Ulster Bank is to prepare ourselves to come out the other end,' he added.
Mr McCarthy also revealed that senior management at Ulster Bank have had a pay freeze this year. He said he had received no bonus for last year and while declining to give an exact figure predicted that his pay for this year will be reduced about over 40%.
Meanwhile, the IBOA union has welcomed the confirmation by Royal Bank of Scotland that Ulster Bank is to remain within the group and will not be sold off or subjected to further job reductions.
