Ulster Bank, the Irish subsidiary of NatWest, is looking for further growth following the 6 per cent rise in pre-tax profit from £66 million sterling to £70 million in the six months ended June 30th, 1997. There was an adverse currency translation from pounds to sterling which, if excluded, would indicate an underlying profit growth of 11 per cent.
The improvement in the first half should "carry us forward into the second half", said Mr Paddy McMahon, chief executive, Ulster Bank Markets. There should be a bigger pick-up in the bank's operations in Northern Ireland as it benefits from the renewed peace, he added.
Chairman, Sir George Quigley noted that the restoration of the ceasefire had opened up fresh possibilities for progress on the political front, albeit there were many difficulties still ahead. These developments, he added, "offer the opportunity to enhance economic growth throughout the island of Ireland".
Ulster's Northern Ireland operations still account for around 40 per cent of profits. They experienced strong growth, but growth was somewhat better in the Republic. Mr McMahon said lending in Northern Ireland increased by 8 per cent, while lending in the Republic rose by 10 per cent.
Commenting on the latest results, chief executive, Mr Ronnie Kells said the outcome was due to several factors. "We have continued to expand, grow our operation and win new business. This growth is reflected in our income and in an increase in staff numbers of 294 over the same period last year."
The bank either maintained its market share in the areas it operates, or increased it, Mr McMahon said. Asked about the cost income ratio which rose marginally from 57.9 per cent in the first half of 1996 to 58 per cent, he noted that this was below the level of 59.8 per cent in the second half of last year. The bank, he contended, is still aiming to reduce this ratio to 55 per cent by 2000.
Ulster Bank's policy continues to focus on organic growth and strategic acquisitions. The purchase of NCB in 1994 has proved to be a very successful strategic acquisition, he said, and the bank continues to run the slide ruler over potential acquisitions.
Asked about TSB, Mr McMahon noted the bank has a continuing interest in TSB "if the Minister puts it up for sale". A take-over of TSB would still be "very logical".
Ulster Bank's net interest income rose by 7.2 per cent from £111 million to £119 million in the first half. Fees and commissions rose marginally from £35 million to £36 million as did dealing profits from £23 million to £24 million.
Total income increased by 5.8 per cent from £171 million to £181 million. This higher income came largely from increased lending and treasury operations.
Costs rose by 6 per cent to £105 million. This is attributed to higher staff and administrative costs. Bad debt provisions remained unchanged at £6 million reflecting buoyancy in the economies of both Northern Ireland and the Republic.
Group deposits increased by 4 per cent to £4.67 billion. Mr McMahon noted that real growth was 9 per cent after the adverse currency translation is taken into account. Lending increased by £271 million to £4.3 billion reflecting an underlying growth rate of 12 per cent. However, in common with other banks, more intense competition led to lower margins.
Ulster Bank Retail - which includes the branch network, the Lombard companies, the invoice discounting, mortgages, cards and insurance broking businesses - increased profits by 5 per cent to £40 million.
Ulster Bank Markets, its corporate banking, treasury, stockbroking and investment management side enjoyed a 7 per cent increase in profits to £30 million despite the adverse impact from the strength of sterling. NCB had an "excellent" performance, according to Mr McMahon.
