Friday 9 December 2016

Bank of Ireland profits suffer in first half of 2016

Published 29/07/2016 | 07:20

Bank of Ireland's Group Chief Executive Richie Boucher. Picture credit: Frank Mc Grath
Bank of Ireland's Group Chief Executive Richie Boucher. Picture credit: Frank Mc Grath

Underlying pre-tax profit fell nearly 25pc at Bank of Ireland (BOI) in the first half of the year - coming in at €560m.

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The figure was €743m last year. It excludes certain non-core items that obscure the group's underlying financial performance, the bank says.

Chief executive Richie Boucher said the bank "continued to perform in line with the strategic objectives we have set ourselves".

"All trading divisions are profitable and have contributed to our solid financial performance during the period. Our core loan books have been growing and we remain the largest lender to the Irish economy. Our stock of non-performing loans and our customer loan impairment charge continue to reduce," he added.

Mr Boucher said it was too early to determine the impact of the Brexit vote on economic and consumer activity, but added that the bank had a strong business model which gave him confidence in its prospects.

Davy analysts Diarmaid Sheridan and Emer Lang said the underlying pre-tax profit beat expectations by 5pc.

New lending at the bank was up 14pc on the first half of last year at €6.9bn, the bank said.

Its financial statements show falls in net interest income and operating income, and a rise in operating expenses (before levies and regulatory charges). The bank's net interest margin (NIM) - an important measure of performance that shows the difference between interest take in and interest paid out - fell from 2.21pc to 2.11pc.

That's in contrast to the bank's rivals AIB and Permanent TSB which posted NIM rises this week, but Bank of Ireland's margin is still higher than the others.

It said the resumption of dividends - long awaited by shareholders - could be affected by external factors including the Brexit vote.

Speaking on Morning Ireland, Mr Boucher said he would keep the bank's Republic of Ireland branch network under review, after BOI recently announced plans to shut branches in Northern Ireland. He said he envisaged that in five years it would still have a significant presence on the ground while also investing in new digital products.

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