Wednesday 28 September 2016

Dividends are back, but is growth?

Published 23/02/2016 | 02:30

Bank of Ireland boss Richie Boucher. Bank of Ireland Photo: Steve Humphreys
Bank of Ireland boss Richie Boucher. Bank of Ireland Photo: Steve Humphreys

Asked to describe the mortgage market yesterday, chief executive Richie Boucher said he'd call it "normalising" rather than normalised. It's true of the bank too.

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Shareholders now have the prospect of Bank of Ireland becoming a dividend stock, with payouts starting next year.

They're affordable because profits are up and bailout loans have finally been repaid.

But problems remain. Like all Irish lenders, it has a hefty stock of bad boom-era loans, a legacy that will still take years to shift. It's also struggling to replace older loans as they are paid off. New lending rose 40pc last year to €14bn, but total lending barely increased.

The best way for the bank to grow is by making home loans but its hemmed-in by the Central Bank mortgages restrictions and the linked lack of new building supply.

Last year's €1.4bn of Irish mortgage lending is likely to be matched rather than beaten in 2016.

Irish Independent

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