National Irish Bank has reported a pre-tax loss of €161m for the first three months of the year as it set aside €172m in provisions for bad debts. This marked an increase from the loss of €133m reported the same time last year.
The bank, which is owned by the Danske Bank Group, says its first quarter operating profits fell by 18% to €11m.
The bank said that its income fell by 17% to €35m due to reduced customer demand and the impact of bad loans. Costs also fell by 17% to €24m due to the bank's restructuring programme.
Half of NIB's branches nationwide have closed in recent months and late last year the bank said it was changing its strategy in Ireland to focus on wealthy and corporate customers.
National Irish Bank said that its loan book fell 9% to €9.3 billion. It said that its commercial property loans amounted to €3.3 billion, with most of its bad debt charges in this area.
It added that the quality of its €3.5 billion mortgage book remained 'satisfactory'.
'These results reflect a very difficult environment but they highlight the importance of the restructuring programme we completed last year,' commented NIB's chief executive Andrew Healy.
'Loan impairments remain very high and will continue to be heavily influenced by economic conditions, property values in particular. This said, we hope to see these numbers trend downwards over the coming quarters,' he added.
Island of Ireland makes up half of writedowns: Danske
NIB's parent group, Danske Bank, said its first quarter pre-tax profits rose by 8% to €201m as it set aside €381m for loan impairment charges.
Denmark's biggest financial institution posted higher than forecast profits for the first quarter but disappointed analysts as trading income was one of the few positive surprises and write-downs in Ireland remained high.
While loan impairments fell, they exceeded analysts' forecasts and the bank's rising profits faded as they were due to an extraordinarily big rise in trading income.
Danske said Ireland and Northern Ireland currently account for about half of the group's total loan writedowns.
There were no immediate improvements in sight and the Irish units continued to face serious challenges, the lender added. Danske owns Northern Bank in Northern Ireland.
'Proportionally, Ireland is still the largest sinner, and after that is Nothern Ireland,' Danske's CEO Peter Straarup said.
'I expect, unfortunately, that Ireland can be costly for the remainder of the year as well,' Straarup said.
'Banking activities in Ireland continue to face serious challenges,' he added.
Loan writedowns overall would be lower this year than in 2010, but would not necessarily fall continuously from quarter to quarter, he said.
Danske Bank's report followed strong results from Swedish peers about two weeks ago. Nordea, the Nordic region's biggest lender, and peer Swedbank reported slightly stronger-than-expected earnings as they continued to benefit from record economic growth in Sweden.
But not all Nordic banks are enjoying the economic upturn equally, and Denmark has struggled to catch up with the recovery enjoyed by some of its Nordic peers.
Last week, Denmark's second-biggest bank, Jyske Bank, missed analysts' profit forecasts and refrained from giving a 2011 earnings outlook, saying the economic environment made it too difficult to forecast.
Danske Bank's loan impairment charges shrank a third to 2.84 billion crowns, compared with a forecast for 2.60 billion.
Its Nordic banking activities had however begun performing relatively well, Straarup said. The bank said it was strongly capitalised after the first quarter and saw no need to consider raising more capital.
In April 2011, Danske raised 20 billion crowns in new share capital through an underwritten rights issue. The issue lifted the bank's core tier 1 capital ratio to about 12.4% from 10%.
'Danske Bank is now one of the best-capitalised banks in the European Union,' it said in the statement.
