BoI 'needs more loss provisions'
BANK of Ireland hasn't classified nearly enough loans as "impaired" and hasn't taken adequate loss provisions against the impaired loans it has recognised, according to an analysis by NCB.
But the broker held its "buy" rating on the Richie Boucher-led bank, stressing that it has enough capital to withstand a "material increase" in impairment charges.
The report, circulated to NCB clients last night, comes after BoI revealed on Monday that it had taken €1.9bn in loan loss provisions for 2011. NCB had been expecting €3.3bn.
In the note, NCB described the lower-than-expected figure as a "timing issue" and said the €8.9bn of losses it expects by the end of 2013 would "still be incurred in the three-year period".
The broker believes that impairments will accelerate in 2012, with 50pc growth in the number of Irish mortgages classed as impaired and a doubling of UK impaired mortgages "albeit off a low base".
But the broker remains positive on BoI's general prospects, praising the bank for its "excellent" result deposits, where the bank brought in €8bn of new cash since July.