Bank of Ireland aiming to repay €1.3bn of debt in 2016 - Boucher
Published 04/09/2015 | 02:30
Bank of Ireland will look to repay €1.3bn of preference shares early next year to enable it to resume dividend payments, chief executive Richie Boucher said yesterday.
Ireland's largest lender by assets has led a sector-wide revival as the economy grows faster than any other in Europe and is set to be the first among the country's three domestically-owned banks to resume dividend payments following the 2008 financial crisis.
It must first stop counting the preference shares, a type of debt, as capital and after increasing its core Tier 1 capital ratio by 20pc in the first six months of the year, analysts predict it will redeem the shares at the earliest point of a guided January to July 2016 range.
"The prefs are costing us €300,000 a day so there's a large financial incentive," he said, referring to the shares that carry a coupon of 10.24pc. "I wouldn't disagree with the market's anticipation that we want to do it as quickly as we can.
Mr Boucher, who described as "immensely frightening" the days in 2010 before the country signed up to an international bailout, wants Bank of Ireland to become a predictable income stock, which to his mind means ultimately targeting a payout ratio in excess of 50pc of attributable profits after tax.
The bank is expected by analysts to declare a dividend in the second half of 2016 or first half of 2017.
"It certainly wouldn't be in the first half of next year. I think some of the market is thinking 2016 and some are saying they'll probably wait until 2017," Mr Boucher said. "I think it's a bit premature for us to form an absolute view on that."
After more than doubling its profit in the first half of this year, Mr Boucher said the 14pc percent State-owned bank, the only Irish bank to avoid falling under full government control, has seen continued momentum in loan demand and declines in non-performing loans.
Mr Boucher said he can see evidence of the recovering Irish economy in rising current account balances and medium-sized businesses moving from restructuring to growth.
Bar a couple of possible further loan book acquisitions in Ireland, the main growth opportunity will come in Britain where Boucher says the bank can double its share of the mortgage market to 2pc.
With Britain accounting for around 40pc of a total loan book it wants to grow above €90bn in "two or three years time", the bank may also look at more partnerships following tie-ups with the British Post Office and roadside recovery firm AA.
"We do have people coming to us and saying would we be interested in having a chat with them, I think we have to be very selective with the type of partners and ensure that we don't become, shall we say, promiscuous," he said.
With such "positive challenges" now ahead, Ireland's longest serving bank chief executive said he has no plans to retire.
"If I look at the short to medium term horizon, I think we've got a lot of things we want to achieve in the bank and I'm very happy to be part of that," said the 57-year-old who took charge in 2009. "The restructuring wasn't the job, we need to prove that we can run these businesses well." (Reuters)