Time will tell if market shares Boucher's confidence
Bank of Ireland chief executive Richie Boucher is able to talk about things other Irish bank executives cannot even comprehend in the current climate.
Mr Boucher was yesterday talking about "disengaging" from the government guarantee scheme, about loan losses actually "peaking" and he even managed to mention a word rarely heard in bank boardrooms these days: dividends.
Despite taking an impairment of €4bn on its property loan book, Mr Boucher was projecting an air of confidence. This may seem strange to outsiders considering his bank racked up a pre-tax loss of €1.8bn in the nine months to the end of December, but finance is all about the future, not the past.
Mr Boucher believes the bank can raise €2.7bn of fresh capital, through a combination of asset sales, a rights issue and some kind of injection from the Government. Whatever the combination, he believes he can keep the Government's shareholding below 50pc. In fact his confidence stretched even further, and he told the media he didn't even think he would need the Government to underwrite the rights issue, relying instead on a group of as yet unnamed investment banks.
Of course, the bank's investment case will have to prove appealing and Irish banks remain out of favour in the main financial centres of Europe and the US. Nevertheless, Mr Boucher hinted that once capitalised and stabilised, the bank could think about resuming dividends, although nobody is expecting this to happen anytime soon.
While he claims that loan losses have peaked, this is a reference to overall loan losses. Below this surface figure are all sorts of disturbing trends, including bad debts on mortgages which almost doubled in the latest figures. Mr Boucher said these losses certainly hadn't peaked and the bank now restructures about 700 mortgages a month. Alarmingly, 20pc of the Irish mortgage book is now in negative equity.
However, he said the bank's balance sheet remained strong enough to sustain a major deterioration in the mortgage book. This may be true, but it does make one nervous after previous assurances about commercial property from Irish bank executives proved so hollow.
The one subject Mr Boucher preferred not to discuss was hiking mortgage rates. Beyond confirming they would rise, he would not be drawn. But the bank's profit and loss account doesn't lie, with net interest margins now standing at just 1.59pc, down from 1.74pc. The company is simply paying out too much on deposits and not clawing back enough on loan products. This will change soon.
As for his stewardship of the bank, Mr Boucher was more contrite than many executives in the industry. "We have lost a lot of money on property lending," he agreed and admitted the discounts on the NAMA loans, which amount to 47pc across the sector, were "pretty frightening".
But he seemed almost bored by discussions about past impairments and NAMA "haircuts". The future is a more pleasant subject for him and the bank. "The most important thing is, do we have enough capital?" he said. He thinks the bank can get this desperately needed capital. We have yet to see whether the market agrees with him.