Monday 24 September 2018

Bank of Ireland losses narrow to €455m

Bank of Ireland Group Chief Executive Richie Boucher, pictured at the bank's AGM
Bank of Ireland Group Chief Executive Richie Boucher, pictured at the bank's AGM
Sarah McCabe

Sarah McCabe

Bank of Ireland’s progress towards profitability gained momentum in the first six months of the year as chief executive officer Richie Boucher said he was relaxed about upcoming industry stress tests.

Results released this morning show that net losses for the first half narrowed to €455m from €1.1bn a year earlier, as loan impairment charges fell 17pc to €780m. “The pace of growth in defaulted loans continues to slow” said chief executive Richie Boucher.

The bank said its loan to deposit ration is at targeted levels and capital ratios were “healthy.” Its core tier 1 capital ratio under EU rules is 14.2pc, well above the regulatory requirement of 10.5pc.

“If we had felt we needed more capital, we would have to be making an announcement,” said Mr Boucher, 54, adding that the bank has carried out a “rigorous” internal capital assessment.

This is the first time the bank has raised the prospect of moving closer to profitability after reporting underlying losses since 2009, with the exception of one-time gains from buying back junior bonds.

Total income was €1.8bn, an increase of 36pc due primarily to higher interest margins and few fees under the government bank guarantee scheme.

The net interest margin, the difference between the rate at which it borrows and lends to customers, widened to 1.65 percent from 1.20 percent as the bank cut deposit costs and raised lending rates.

“The bank looks well on track to return to profitability in 2014” said Dublin stockbrokers Davy.

The bank said the rate of growth in mortgage arrears continued to ease in the first half. By value, 10.5pc of the bank’s Irish owner-occupier mortgages were at least 90 days behind in payments at the end of June, up from 9.9pc in December. Buy-to-let arrears rose to 26pc in June from 23.4pc six months earlier.

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