Ms Jane Howard:

I thank the committee for the invitation to appear before it. As this is my first appearance before the committee, I feel it is respectful to members to take a few moments to introduce myself. Last September, I moved to Ireland from Manchester and I am privileged to have taken up the role as CEO of Ulster Bank. I have worked in financial services for almost 39 years in a variety of roles, including in retail, corporate, operations and risk management. In my previous post, at the Royal Bank of Scotland, RBS, I was managing director of NatWest and RBS personal banking, where I was responsible for leading the team for the day-to-day banking needs of approximately 15 million customers throughout the UK.

I am joined by my colleagues, Mr. Paul Stanley, chief financial officer and deputy CEO, and Mr. Ciaran Coyle, managing director of personal banking. In the invitation letter, the committee expressed an interest in Brexit preparedness and the accountability framework for the banking sector, which I will cover in my opening statement.

I begin by providing some insights into the progress we are making in Ulster Bank. Our strategy is to continue to leverage our parent and to build a stronger, safe and sustainable bank, offering high-tech and high-touch solutions to provide effortless everyday banking services that our customers value, and to be there for them for what matters to them. We believe that a blend of digital and physical banking is the winning combination because our customers tell us that is what they want and value. To support our strategy, we continue to focus on innovation. We have expanded our partnership with Dogpatch Labs, a leading co-working space for technology start-ups. Some of our colleagues are developing their entrepreneurial talent and creativity to deliver innovative solutions for our customers. We recently co-hosted a fifth annual Hackathon, a weekend which brought together members of the community, including the tech community, to design innovative banking solutions for customers.

Underpinning, and fundamental to, our strategy is the continuation of transforming our culture to one where customers are consistently at the heart of everything we do, served and supported by professional colleagues.

Since Ulster Bank’s previous appearance before the committee, we have made tangible progress on our priorities. In respect of lending to support our customers and the economy, a core part of our strategy is to help our personal customers to buy a home and to save money by switching to lower rates. This aligns with our investment to improve the service and offer market-leading fixed rates. Last year, we saw a 13% increase in new mortgage lending to €1.13 billion. That momentum has continued into this year. We also lent approximately €1.4 billion to our business customers and, with a good start to 2019, we expect that figure to grow this year. Our Lombard asset finance business saw volumes increase by more than 40%, or almost €200 million of new lending. We were conscious that 2018 was a particularly challenging year for the agrifood sector and introduced a weather fund to support customers in a year of unprecedented weather events. We expanded our relationship with the Strategic Banking Corporation of Ireland through its Brexit loan scheme and joined the BGF backers for businesses. We also intend to participate in the new future growth loan scheme.

We continue to see more customers change the way they bank. Today, seven out of ten active personal current account customers choose to bank using digital channels and in the first quarter of this year, we have seen a 31% increase in mobile payments and transfers compared with quarter 1 2018. We are listening to what our customers want from us and innovating to make our customer experience effortlessly everyday and brilliant when it matters.

In the past year, we have introduced new applications and services such as: ClearSpend, which gives businesses better control of their expenses; Manage my Mortgage for our residential mortgage customers, enabling them to make changes to their mortgage online and from the comfort of their home; and Cora, our new artificial intelligence-driven digital banking assistant to help answer customer queries 24-7 every day of the year. We have also been adding more features such as FaceID and paperless processes for our everyday banking products, making the digital experience simpler and more secure for customers.

As I mentioned, our strategy is both high-tech and high-touch. We have invested in our physical presence, expanded our mortgage broker panel and increased the number of mobile mortgage managers across the country, offering flexible meeting times and locations, chosen by our customers. We have five mobile banks, a community protection adviser and our team of community bankers. We are continuously improving our branch network and 41 branches have seen investment. We plan more this year. New needs arise for our customers and last year we launched Friends Against Scams. We are committed to playing our part in the fight against fraud so we trained colleagues across the bank. We are educating customers on how to protect themselves against the horrific practices of scams which, when they happen, can impact consumers and our customers so badly.

Since our previous appearance before the committee, we have made progress on reducing our non-performing loans, NPLs, which stand at just over 10% of the total, but there is more to do. Our regulators have set out capital requirements for NPLs and those requirements mean that over the coming years we will need to increase the capital we hold up to a point where we will have to hold enough capital for the full amount of the non-performing loan. That capital is then tied up and we cannot use it to support loan growth which would contribute to the Irish economy. To be clear, our priority is to work with our customers to put in place long-term sustainable arrangements so that as many customers as possible can remain in their home and paying off their mortgage. We have invested in additional resources to ensure that every customer has every opportunity to engage with us to enter into a long-term solution. We have found that when customers have worked with us, a solution can be found for four out of five, meaning they can remain in their homes.

We have also made significant progress on our customer remediation programmes to put right our wrongs of the past and learn from our mistakes. We completed a thorough process to identify all impacted tracker mortgage customers and we do not anticipate any new or additional impacted upon groups of tracker customers to emerge at this point. We have made redress and compensation payments to all tracker mortgage examination customers for whom we have contact details. The thorough review identified other issues relating to errors on the accounts of business and mortgage customers that we will have resolved by the middle of this year and end of this year respectively. Let me take the opportunity now, as this is my first time in front of the committee, to sincerely apologise for our past mistakes and the impact they had on our customers.

Turning to Brexit, the subject is top of mind for many customers, although many of our business customers tell us also that shortages of both skilled and unskilled labour is a bigger issue. Supporting our customers is a top priority and we continue to do this, first, by communicating what we can do to support them to understand the impacts of Brexit and, second, drawing to their attention all the Government and agency supports available, which are excellent. We see different types of businesses that can adapt and which are adapting. Many are well-prepared and have sound contingency plans. There are particular challenges for some customers who export to the UK or who use the UK as a land bridge to the European market. Where additional resources and guarantees are required in respect of customs and tariffs, for example, we are ready to support our customers.

We continue to monitor the impact of the UK decision to leave the European Union on the bank and our customers and have been preparing for a number of scenarios, including a no-deal position, as part of our contingency planning as a stand-alone bank and as part of RBS. There has been no material impact noted to date; however we are conscious of the potential for future impacts on the bank, our customers and our operations. A bank-wide Brexit response programme has been mobilised to assess those impacts and to develop contingencies under a number of Brexit scenarios to ensure that we can continue to serve our customers well. Regardless of the outcome of the Brexit negotiations, our aim is to support customers with the same level of service and range of products as we do today and to help them address any related challenges.

The committee also asked me to address the topic of the accountability framework. I welcome the introduction of the senior executive accountability regime and I know from my experience in the UK how such a regime can make a difference to promoting stronger accountability, ethics and culture in financial services. Increased accountability will be better for our customers and for society as a whole and while a senior executive accountability regime alone will not transform culture within the banking industry, it will help.

I will finish on the topic of culture. Much has been said about banking culture at this committee and at other fora in recent times. We in Ulster Bank have learned many lessons. We got things wrong and we are fixing mistakes from the past and learning from them. We are absolutely committed to rebuilding trust with our customers and Irish society. We recognise we have much to do and we are changing. We are making different decisions today from those we may have made in the past.

In Ulster Bank we have defined our culture as "the way we do things" and it is consistently living our values to act in the best interests of our customers, colleagues and stakeholders. Our four core values – serving customers, working together, doing the right thing and thinking for the long term – guide our priorities, activities and decision making. We have strengthened our risk and control environment to reduce the possibility of errors occurring. We are building a customer-focused culture where colleagues are encouraged to help customers be financially fitter and to speak up if and when see things that might look wrong or if they have any concerns. Tone from the top is something I and my leadership team are conscious of every day. This is one of the reasons I have personally committed to completing the Institute of Bankers professional diploma in leading cultural change and ethical behaviours in financial services and sitting on the Irish Banking Culture Board.

I am pleased to report we have made progress over the past 12 months across our customer, operational and financial metrics, along with the continued execution of our strategy to transform Ulster Bank. We are happy to take any questions.