Ulster Bank has reported an operating loss of €276m for the six months to the end of June compared to an operating profit of €26m the same time last year.

The bank said the fall is mainly due to a €278m net impairment charge against a potential surge in loan losses and reflected the likely impacts of the deterioration in the economy due to Covid-19. 

Speaking on RTÉ’s Morning Ireland, Ulster Bank CEO Jane Howard said that amount was based on their best estimates for what would be required in the coming period.

"When we estimate all we can do is take our models, we look at what the analysts are saying, we look at what the economists are saying, but this is one of these crises where no-one can predict what's going to happen," she said.

"But given all the information we’ve got today, and the behaviours that we’re seeing from our customers, we think it’s a reasonable amount," she added.

Ulster Bank said it had agreed over 16,800 payment breaks with its customers since the outset of the pandemic. 

Some of those had gone back to regular repayments after the initial three month period, however most took up the option to extend the break by a further three months.

Lenders, including Ulster Bank, have been criticised for opting to charge interest on loans during the payment break, however Ms Howard argued that it was the fairest thing to do.

"We have to be fair to all of our customers, nine out of ten who have a mortgage aren't taking a break, but many of them aren’t impacted by their job, whether they've been furloughed or whatever, so I believe it’s a fair way of treating all of our customers," she said. 

"If we'd have said to everybody 'look, this is free’ I think the risk there is that well, why wouldn’t everybody take a mortgage break?," she added.

"It’s not anybody’s interest to be taking a mortgage break, really, but it was necessary because of this crisis that happened overnight," Ms Howard said.

The bank said it had seen a decline in demand for new lending with net loans to customers decreasing to €20.5 billion from €21.2 billion the same time last year. 

However, customer deposits increased by €0.7 billion or 3.3% in the six month period.

The bank also said its operating expenses reduced to €283m from €322m last year on the back of a 9.7% reduction in headcount and reduced project costs.

Ulster Bank said the vast majority of its staff continue to work from home due to the Covid-19 pandemic.

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Ms Howard said that while the full impact of Covid-19 is as yet unknown, there are challenging times ahead.

"However we remain in a strong capital and liquidity position which combined with our purpose and strong customer focus, will assist us to serve our customers well and to play an active, responsible part in the recovery of the Irish economy," the CEO said.

Jane Howard said the bank continues to concentrate resources on areas to help customers with the support they need during the Covid-19 crisis.

These measures include dedicated opening hours and phonelines for frontline workers and elderly customers, it companion card to help customers who may be reliant on another person to purchase essential goods, its fraud awareness campaign, meetings via video, payment breaks and its working capital support fund for business.