Bank of Ireland dividend likely next year - Davy
Published 29/08/2015 | 02:30
Bank of Ireland is likely to restart dividend payments with a "modest" initial payout of 93 cents per share for 2016, Davy Stockbrokers has said.
The Bank saw half-year net profits increase 80pc to €624m - well ahead of expectations and company chief executive Richie Boucher said just weeks ago that the firm was now in growth mode.
The half-year profit compared to €344m a year earlier and came on the back of revenues of €1.76bn.
Davy said it was now moving to incorporate dividend payments into its forecasts, with the first being declared next year.
"We expect BOI to recommence payments with a modest initial dividend of €300m/0.93c per share in full year 2016, rising to €500m/1.54c per share in full year 2017, which equates to a 33pc and 46pc earnings pay-out ratio respectively and indicates a dividend yield of 2.7pc in 2016, rising to 4.5pc in 2017," said Davy analyst Diarmaid Sheridan.
Mr Sheridan said that by incorporating dividend payments, its forecast core equity tier 1 (CET 1) ratio is reduced by 50bps next year and 150bps in 2017.
"However, with a fully-loaded CET 1 ratio of 14pc in full year 2017, our forecast suggests that BOI will retain significant excess capital above our 12pc hurdle level," Mr Sheridan said.
This, he said, suggests Bank of Ireland has the capability to distribute a greater level of dividends than forecasts envisage.
Richie Boucher said earlier this year that he's focused on returning the bank to paying dividends, which have been scrapped since 2008.