Ulster Bank has announced operating profits of €362m for 2015, down from just over €600m in equivalent profits last year.

The fall in profitability mainly reflects the fact that Ulster Bank was able to release less than half the amount of reserves it had made against bad or impaired loans last year, compared with 2014.

That in itself is a sign of a strengthening balance sheet for the bank and an improving economy generally. The bank’s business in the Republic of Ireland saw net interest income fall by just over £100m last year primarily due to the weakness of euro relative to sterling causing a lower return on its free funds.

The bank attributes a 13% increase in its operating expenses to higher pension, litigation and regulatory charges.

New lending increased by 65%, growing to €1.5bn - mortgage drawdowns rose by 53% to €700m.

Its interim chief executive Paul Stanley commented on the results, "2015 has been another solid year for Ulster Bank with an operating profit of €362m representing two years in profit for the Bank in the Republic of Ireland."

Ulster’s parent bank, Royal Bank of Scotland, which also reports results this morning, says the Ulster Bank franchise is focused on improving returns by reducing its costs.

RBS has reported its eighth year in a row of annual losses with a deficit of £2bn - down from £3.5bn in the previous year.