Bank of Ireland and Ulster Bank confirm return to profit
Bank of Ireland and Ulster Bank have become the latest lenders to confirm their return to profit.
Bank of Ireland made a profit of €399m in the first six months of the year - the first in five years - as loan losses fell and interest income rose, according to financial results published yesterday.
Ulster Bank said it made a profit of €84m in the same period.
Bank of Ireland chief executive Richie Boucher said the level of loan defaults is declining, while collateral values of underlying securities such as houses and commercial property are increasing.
Impairment charges on loans and advances to customers fell by €444m in the six-month period, down from €780m in the same period last year. Defaulted loan volumes fell to €16.7bn, compared with €17.1bn at the end of December.
Revenues made up of interest charges and fees were up 24pc in the period to €1.5bn.
All of the bank's main business, including its Irish retail bank, are now profitable, Mr Boucher said.
The bank's net interest margin - a closely-watched gauge that measures the difference between borrowing and lending costs - rose to 2.05pc, double what it was at the trough.
The number of mortgage borrowers in deep arrears of 90 days fell to 7pc and is half the industry average, the bank said.
Buy-to-let mortgage arrears rose to 18.5pc.
Around 50 staff are working full time to prepare for European bank stress tests due to be completed in October - a process that has a multi-million-euro cost, Mr Boucher said. Bank of Ireland's core tier 1 capital, a standard measure of financial strength, stands at 13.2pc ahead of stress tests, he said.
The bank is benefiting from a generally recovery across the Irish economy, he said.
"It's a classic recovery driven by exports, consumption and coming through in domestic confidence and employment levels. We have seen a pick-up in credit demand, defaulting has reduced, all pointing to a slow but broadly-based recovery in the economy."
Ulster Bank, meanwhile, said its trading had been boosted by improvements in impairments and a stronger net interest margin, while costs fell.
Ulster's net interest margin increased 2.32pc, the best of the main banks. Impairment losses were reduced by £446m (€543m).
"Today's results demonstrate a second consecutive quarterly profit, the success of our existing strategy and sustained progress across all areas of the bank," chief executive Jim Browne said.
Shares in Bank of Ireland closed flat yesterday at 26.5 cents each, shy of the 29 cents average price achieved by former shareholder Wilbur Ross, who sold his almost 10pc stake in the bank earlier this year in two tranches. Ulster Bank parent Royal Bank of Scotland's shares fell after it said it will cut lending to Russia.