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Wednesday 27 August 2014

Noonan: Banks performing well but there's "room for improvement"

David Raleigh

Published 03/03/2014 | 16:26

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Michael Noonan, Ireland's finance minister, speaks during an interview in New York, U.S., on Wednesday, Jan. 29, 2014. Noonan said Bank of England Governor Mark Carney told him at Davos last week that RBS unit Ulster Banks position in Ireland wont change as part of parent review to conclude next month. Photographer: Scott Eells/Bloomberg *** Local Caption *** Michael Noonan
Michael Noonan

THE Minister for Finance has described Bank of Ireland as "making good progress" despite the bank reporting an underlying pre-tax loss of €569m for last year, down from almost €1.5bn in 2012.

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He also said there was "room for improvement" on how Irish banks are performing regarding their overall restructuring plans.

Bank of Ireland said today it recorded an operating profit for the year of more than €1bn before impairment charges on loans of €1.6bn were taken into account.

The State currently holds 14pc of Bank of Ireland’s shares following its €4.8bn bailout during the economic collapse and it owns 99pc of AIB.

Minster Michael Noonan, speaking in Limerick today said: "They (BoI) are making good progress. We meet them from time to time at senior level. The Central Bank have set targets for them, and by and large, they are meeting those targets."

"As the economy turns and begins to grow again, it's vital that we have banks performing and providing credit, and Bank of Ireland is playing its part and is coming back towards profitability," the Minister added.

The annual report showed the breakdown of impairment charges for loans with residential mortgages costing the bank €573m last year. Property and construction lending cost €583m.

Reacting to comments made by Bank of Ireland boss, Richie Boucher -- who said a key priority for the bank, remains the solution of Irish mortgage arrears -- Minister Noonan said: "I heard the CEO of Bank of Ireland on radio this morning, and he said, that by the end of the year, they will have offered restructuring packages to everybody in mortgage arrears. They have already reached that point on the other debts that they have, particularly on the buy-to-let loans."

Minster Noonan agreed AIB was not moving as quickly as BOI, however he said that was not surprising, given AIB had begun its restructuring plans at a later stage.

He added there was "room for improvement" for all the banks in achieving their individual restructuring plans.

They (AIB) didn't start as quickly (as BOI) because Bank of Ireland is 85pc private investment whereas AIB is 99pc state investment, so Bank of Ireland has started their restructuring quicker, and so is slightly ahead. But AIB is following very strongly and so is PTSB so, they are all now working in accordance with Central Bank targets and they are all doing reasonably well."

"There is always room for improvement, and we'll keep talking to them directly and through my officials to ensure they achieve the targets sent down," he added.

Minster Noonan called on the Credit Union movement to improve their lending output to customers.

He described the sector as financially sound: "There's about 430 credit unions (and) there's now a lot of capacity to re-lend, because the capacity to start lending is based on the amount of deposits that they have and they should go and starts lending. The ones that can afford to (should lend). Credit unions, a lot of them are in very good shape."

He disagreed that he was "directing" the sector to lend money but was merely "suggesting there's an opportunity" to lend.

"I'm coming at it from the angle that, a growing economy needs credit to sustain the growth and make it grow stronger. One of the ways to make it grow for households -- getting households the credit they need -- is through the credit union movement. They're a great movement and they are kind of unique to Ireland," said Minister Noonan.

Asked if he still had concerns over the costing of the new healthcare schemes, Minster Noonan said today:

"What he (Minster for Health) has promised to do is to publish a White Paper setting out all the details of health insurance health schemes funded by insurance, and we've had preliminary discussions on that already. I agree fully with the idea of a one-tier health system which is funded through the insurance industry."

"I wouldn't be doing my job if I wasn't looking at costs will be controlled, but the date Minister Reilly suggests for the commencement for the scheme is 2019, so we've got a lot of time to discuss the detail."

Regarding a future role in Europe for Enda Kenny, Minister Noonan said: "He (Taoiseach) said himself that he wants to stay at home and lead us into the next election, and win it. So, that sounds to me like a statement of intent that he's going to stay here at home. "

"How far out do you want me to look...like (for example), will Limerick win the All-Ireland in 2024?," he joked.

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