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Profits down at troubled NIB

February 16, 2011

By Staff Reporter

By Andrew Bushe

DUBLIN — Profits at the troubled Australian-owned National Irish Bank have been almost halved as a result of costs from the fallout about the controversy surrounding interest-fee loading of customer accounts and selling offshore insurance products that were used to evade tax.

Pre-tax profits are down to £13.7 million for the first nine months of the year, compared with £25.5 million last year, due to exceptional costs arising from the investigations into the alleged malpractice and restructuring of the bank’s operations.

In August, the bank made an "unreserved apology" to its customers and pledged to pay back over £131,000 to 370 account holders hit by fee-loading of unjustified interest and other charges.

Despite all the difficulties, Chief Operating Office Philip Halpin said the underlying banking business was strong, with operating profits up 19.5 percent to £31.3 million.

He said the business grew very strongly in the first half of the year, but the rate slowed down "marginally" in the second half after the controversies.

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"The amount of damage done to the business has been very limited," he said.

Total customer lending rose by 25 percent to £1,329 million with business lending up 41 percent and mortgage lending rising 15 percent. Customer deposits grew by 7 percent to £1,267 million.

The exceptional costs of £14 million included £5.2 million for the various investigations and £8.8 million for re-structuring the bank’s operations.

He denied there were question marks over the future of the NIB.

"This bank is not for sale. We are part of a major global organization and we look forward to the challenges that lie ahead," he said.

Apart from its own internal inquiry and the probe it commissioned from Andersen Accountants, NIB is also facing investigations by two inspectors, former Supreme court judge John Blayney and accountant Tom Grace, appointed by the High Court following a petition by Tanaiste Mary Harney.

The Garda Fraud Squad, the Revenue Commissioners, the Director of Consumer Affairs, the Central Bank and a Dail Committee have also been investigating NIB.

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