Bank of Scotland Ireland H1 profits up 6% (RTE)
The bank, owned by Halifax Bank of Scotland, said the figures reflected strong growth in net interest income, which was partially offset by higher funding costs and increased operating expenses as it continued to increase the number of branches here.
Lending rose by 34% to £25.6 billion with deposits broadly flat at £7 billion. The bank said that in euro terms, deposits fell by €0.8 billion due to the competitive market here.
The bank said that impairment losses increased from 0.12% to 0.16%, reflecting deteriorating economic conditions in Ireland. However, it said that while arrears levels in its portfolio have increased from historic lows, its 'prudent risk management' should minimise potential losses.
The lender said it is setting 'stress at higher levels' than previously experienced, especially in residential property development, which represents 8% of its portfolio.
But it added that of its total Irish property development portfolio, 91% is rated better than satisfactory or satisfactory using internal credit ratings. This compares to a figure of 96% the same time last year.
As property prices continued to fall here, Bank of Scotland Ireland says it has temporarily withdrawn from the buy to let market and has restricted new activity to lending where the loan to value ratio is less than 90%.
It says its 'cautious' entry to the first time buyers segment of the market has allowed it to avoid many of the areas generating bad debts.
The bank says that economic conditions here are unlikely to improve in the near future and it is adopting a selective approach to asset growth.
'Impairment losses are expected to rise in the declining economic environment and softening property markets, but the longer term prospects for growth in the Irish economy are considered to be favourable and the group continues to invest in Ireland and sees it as a good opportunity for future growth,' the bank said.
Meanwhile its UK parent, Halifax Bank of Scotland, said its net profits tumbled 56% in the first half of the year due to credit crunch turbulence.
Net profits sank to £931m sterling in the six months to the end of June, compared with £2.114 billion the same time last year. Pre-tax profits plunged by almost 72% to £848m, compared with £2.997 billion.
HBOS, one of Britain's biggest home loan providers, added that group income was stable at £6.467 billion during the first half of the year.