The Northern Bank's losses have reached £90m in the last six months - mostly due to bad debt in the property sector.

The loss is due to 'impairment charges' the bank has to pay on bad property debts as it had made a profit of £27.5m, but the charges of £112 has balanced this out as a negative figure.

This is because the money was set aside to cover loans unlikely to be repaid with of those losses relating to loans made to property developers.

The Northern, with 82 branches and 1,700 employees, is part of the Danske Bank group, which by contrast, made profits of more than £400m, before tax. This is up 14% from the first half of 2010.

A company statement today said that the overall NI economic environment "remains fragile" as is reflected in the impairment charges.

It said the charges remain high and reflect the ongoing condition of the property market.

However, the bank insisted that profit before impairments of £21.5m, or £27.5m once adjusted for costs in relation to the charges (PPI) represented a "satisfactory result given the difficult market conditions".

Income levels, although constrained by low interest rates, have increased - a satisfactory performance in the current economic climate.

Overall deposit volumes increased by 5% year on year, although lending balances fell by 6% in the same period.

As at 30th June 2011 Northern Bank's solvency ratio stood at 19.3% and tier 1 capital ratio at 13.2%.

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Commenting on the results, Chief Executive Officer Gerry Mallon said: "Mid-year performance remains as expected.

"Challenging market conditions - notably in property - make it necessary to maintain our prudent policy of making very aggressive provision for potential bad debts.

"Given the ongoing deterioration in the ability of some customers to repay borrowing, we maintain our out-look for elevated impairments for the rest of this year," he commented, noting that the rise in deposits is steadily being maintained, with a year on year increase of 5%.

"We have also included a provision for PPI, although in our robust investigations of PPI, we have found nothing to suggest that there were systemic flaws in our practice.

"This year we invited our personal customers to challenge us to reduce their mortgage repayments.

"We have more than risen to that challenge, and continue to attract new mortgage customers who are able to make substantial savings with Northern Bank," he insisted.

Commenting specifically on their lending and other support for the business community, Mr Mallon continued: "Our appetite and capacity to lend still exceed demand. We continue to encourage good trading businesses to challenge us to support them.

"Our commitment to the business community was reinforced by a major new partnership with the NI Chamber of Commerce - Export First.

"This innovative programme enables us to support both existing exporters and businesses for whom overseas expansion may be the next stage in business growth.

"Our involvement demonstrates our conviction that the exporting capability of indigenous business is a vital component of sustained economic recovery and reflects our unrivalled expertise in this area," he said, adding that the first half of 2011 is characterised by a backdrop of still uncertain economic conditions against which we have taken some difficult decisions as well making substantial commitments to economic recovery.

"Progress towards that recovery and stability is in the interests of all consumers and businesses and we remain committed to playing our part," he concluded.

Internationally, Peter Straarup, Danske's Chief Executive, said the group had achieved positive results in all markets, except in Northern Ireland and the Republic of Ireland.

"Overall, the group's loan impairment charges are down 28% from the first half of 2010, and we expect impairment charges to continue to decline," he said.

"Charges at Retail Banking Denmark are approaching normal levels, while they remain high at the Irish and Northern Ireland banking units," said the Denmark-based banking boss.

(BMcC)