Ulster Bank made an operating profit of £606 million (€752 million) in 2014. This compared with a loss in the previous year of £1.6 billion and was its first annual profit since the financial crash in 2008.
The bank had an impairment release of £365 million and reduced its operating expenses by £105 million.
The provision releases at Ulster Bank were the result of an improving Irish economy and property market, and “proactive debt management”.
Ulster Bank’s profit before impairment losses was £241 million, £76 million higher than in 2013.
On the outlook for this year, Ulster Bank chief executive Jim Brown told The Irish Times: "We expect the momentum that built up in 2014 to continue."
Mr Brown said the bank has had 23 months in a row where its mortgage arrears have improved. Some 9,500 arrears customers are now up to date with their payments. “It’s definitely trending in the right direction,” he added.
Mr Brown said Ulster Bank executed about 50 house repossessions last year via court orders. “We want to keep people in their homes but they need to be talking to us to enable us to do that,” he said.
Mortgage lending rose by 41 per cent last year for Ulster Bank across the island with the sum drawn down by customers in the Republic amounting to around €500 million.
Mr Brown said demand for mortgages is “still strong” in spite of tighter rules on deposits being introduced recently by the Central Bank of Ireland.
The Royal Bank of Scotland subsidiary said its net interest margin improved by 39 basis points in 2014 to 2.27 per cent. It closed the year with a cost-income ratio of 71 per cent, down 10 points.
Its total income declined to £830 million from £859 million in 2013 in spite of its return to the black. The bank said this was largely a result of the “non-recurrence of significant hedging gains on the mortgage portfolio in 2013”.
The bank’s total loans reduced to £24.7 billion at the end of December from £31.4 billion a year earlier.
The loan-to-deposit ratio decreased from 120 per cent to 107 per cent last year mainly due to a reduction in net loan balances to £22 billion. This reflected the transfer of assets to RCR (its bad loans workout vehicle) and continued customer deleveraging partly offset by growth in new lending.
Last year saw RBS commit itself to Ulster Bank in the Republic following a strategic review. It also transferred £4.4 billion of gross assets to RCR to allow Ulster Bank focus on its core business.
Mr Brown said the sale of Ulster Bank’s RCR loans would be “substantially” completed by the end of 2015 with a residual £1.5 billion to go.
RBS plans to integrate Ulster Bank operation in Northern Ireland with its businesses in Britain with its operation in the Republic operating as a separate unit.
Mr Brown said it was “too early to say” if the integration of the Northern Ireland business with RBS in Britain would have any implications for jobs there. “There may be some roles that could be impacted as a result of this,” he said.
