BANK of Ireland boss Richie Boucher has scotched speculation that the institution might need a further cash injection and told Taoiseach Enda Kenny that the bank believes it's "morally important" to ensure that taxpayers receive a return on their investment in the company.
Mr Boucher – the only senior banker to have survived a post-crisis cull – shared a stage with the Taoiseach at a business conference hosted by the bank in Dublin yesterday.
Last month, Mr Kenny blasted senior bankers' pay packets, including that of Mr Boucher, who earned €840,000 between salary, benefits and pension contributions in 2012. The Government expects bank executives to take cuts of between 6pc and 10pc.
The State owns 15pc of Bank of Ireland, with the taxpayer having injected €4.8bn into the company.
Mr Boucher said Bank of Ireland – which made a €2.1bn loss last year on the back of soured mortgages – has the "balance sheet, the capital, the liquidity and the infrastructure to support the Irish business sector".
The bank "definitely" has the capital strength to deal with loan losses and support lending.
"We have very strong and robust capital ratios," he explained, with a 14.4pc tier-one capital ratio and having raised or generated over €9bn in private capital over the past few years. European banks are due to be stress-tested again next year.
"Every financial metric in Bank of Ireland is moving in the right direction," he insisted. "Our revenues are growing, our margins are improving, our costs are coming down, loan losses are reducing, our loan to deposit ratios are improving, our capital ratios are strengthening."
"That momentum, I'm pleased to say, has continued strongly into 2013," he added.
He said that Bank of Ireland's income is beginning to grow again "within a restructured, right-sized balance sheet".
But Mr Boucher also acknowledged that the bank's net interest margin is in an "upward direction" and that the institution's loan charge rates are going up and that it's seeking to pay less for funding.
"That is obviously going to impact our customers," he told an audience of nearly 1,000 business owners.
"However, we cannot credibly say that we can support customers as a long-term strategy for our business unless we are doing so on commercially sensible terms."
Mr Kenny said that he wanted Ireland to be the best small country in the world in which to do business by 2016. He said that Bank of Ireland was demonstrating a "sign of confidence" with small businesses but that the country still had "quite a distance to travel" in terms of recovery.
Bank of Ireland has cut its costs by €500m a year, or 23pc, since the peak of the boom, while 5,500 staff, or 27pc of its workforce, has been let go.
"Reducing our cost base on a sustainable basis is absolutely essential for our sustainable recovery," said Mr Boucher.
He said the bank should experience a "very positive impact" due to the absence of the continuing cost associated with the bank guarantee scheme, which ended in March.
The State is "well in the money" on its investment in Bank of Ireland, said Mr Boucher. He said it had received €3.8bn in payments from the bank for the guarantee scheme and still has 1.8 billion in preference shares in the bank which attract a 10pc interest rate, and a further 15pc equity stake in the bank worth over €800m.