Danske Bank Ireland has reported a loss before tax of €8.8m for the three months to the end of March, as it said its overall performance was in line with expectations.
The figure of €8.8m compares with a loss before tax of €184.3m the same time last year and pre-tax losses of €15m in the last quarter of 2012.
The big yearly drop in pre-tax losses is due to the fact that Danske Bank Ireland is now reporting only ''core business'' which encompasses personal and business banking.
It said it expects its ''non-core business'', which includes commercial property loans - where the bulk of its losses are - to result in impairments of €335m between this year and next year.
In its results statement today, Danske Bank Ireland said that charges for impaired loans fell to €5.5m from €195.2m in the first quarter of 2012. Bad debt charges amounted to €15.7m in the last quarter of 2012.
The bank said that market conditions for the Irish commercial property market are beginning to show signs of stabilisation as property trading is picking up in prime Dublin locations.
''At the national level, however, activity remain subdued and vacancy rates remain high. More than half of non-core Ireland commercial property exposure relates to properties in the Dublin area,'' it added.
The bank said that income increased to €14.6m, while the bank's total loan book stood at €3.2 billion. Customer deposits at the bank rose by 12% to €3.4 billion in the first quarter of 2013 compared to the previous quarter.
Costs increased to €17.9m but Danske Bank Ireland said that when exceptional items associated with its recent rebranding and reorganisation, its underlying costs were down 5% quarter on quarter.
''While costs remain elevated, the underlying costs trend is moving in the right direction as is the case with impairments which continue their downward trajectory as previously guided,'' Danske Bank Ireland's country manager Terry Browne said.
He said the bank's overall performance was in line with expectations given the continuing low growth and low interest rate environment.
Danske Bank to start Irish loan sell-off
Danske Bank said today it intends to sell a large part of its troubled Irish loan book by end of next year to cut loan losses after first-quarter profit missed forecasts.
Danish banks have been stung by bad debts from writedowns on loans to struggling farmers and a burst property bubble, a phenomenon the country's Nordic rivals have so far escaped.
Danske Bank, Denmark's biggest financial institution, nearly halved first-quarter loan impairments to their lowest level since 2008, but weak interest and trading income kept profit below expectations.
The bank has raised capital and laid off staff to turn around the business, but chief executive Eivind Kolding said it would reduce the Irish loan book further and look at more options to cut costs and increase earnings.
The bank said in May last year that it would hive off 35 billion Danish crowns of loans at National Irish Bank and wind them up. "The aim is that the portfolio (of non-core property loans in Ireland) will be significantly reduced by end-2014," Kolding said today.
"We see increasing interest in taking over properties and struggling engagements, so we are pretty confident that we will see a significant reduction,'' he added.
The bank's total Irish loan book currently stands at about 66 billion crowns.
Danske reported first-quarter pretax profit up 38% to 2.2 billion crowns, against an average forecast of 2.41 billion in a Reuters poll of analysts.
Total loan impairments dropped to 2.01 billion crowns in the quarter, from 3.93 billion a year earlier, but net interest income fell 3.5% and net trading income was halved.
Danske's results lagged behind those of its Nordic rivals over the past week. Sweden's Nordea and Handelsbanken last week said that smaller loan losses helped profit to top forecasts, while Norway's largest bank, DNB, forecast stronger lending income after reporting better than expected profit.
Though Danish rival Sydbank reported a fall in first-quarter pretax profit, second-biggest lender Jyske Bank posted a surprise rise in pretax earnings.
Danske Bank kept its outlook for 2013 net profit unchanged at between 7.5 billion and 10 billion crowns.
