Bank of Ireland profits expected to plunge 40pc
Published 12/11/2010 | 10:21
Bank of Ireland is expecting its profits to plunge up to 40pc, managers have said.
In an interim statement, the bank's bosses said it was hit by lower income and higher government charges for the bank guarantee scheme.
Underlying operating profit before impairment charges will be 35pc to 40pc lower than the €1.5bn posted last year, they believe.
The bank has been saddled with loans of €2.1bn that were bound for the National Assets Management Agency (NAMA) but which have now been excluded because of a change in the threshold.
Management said €1.6bn of this portfolio was impaired to the tune of half its value, as of June this year.
Bank of Ireland has now offloaded €3.75bn of land and development loans, at an overall 36pc discount, to the toxic assets agency.
It estimates another €6.35bn in loans remain eligible for NAMA which would be discounted by 42pc.
The bank said arrears on its Irish mortgages have continued to rise but it believes that figure is stabilising, particularly among owner-occupiers.
Losses on Irish mortgages are in line with what the bank had expected, management said.
Arrears in the bank's UK mortgages have stabilised over recent months with losses less than previously anticipated, they said.
Unsecured customer loans were performing better than expected but business banking had deteriorated, according to the interim statement.
Bank of Ireland said heightened concerns on the international debt markets have delayed any plans it had to withdraw from the Irish state bank guarantee scheme.
The global difficulties were to blame for customers withdrawing money from its capital markets business, bosses said.
But retail customer deposits in Ireland remain stable while a joint venture with the UK Post Office was doing better than expected, they added.