Monday 26 August 2019

Bank of Ireland sees pick-up in UK and business lending

Bank of Ireland Group CEO  Francesca McDonagh
Bank of Ireland Group CEO  Francesca McDonagh
Ellie Donnelly

Ellie Donnelly

Bank of Ireland reported an increase in customer lending in the three months to March 31, 2019 but its share of new mortgages slipped to 23pc.

The bank, headed by CEO Francesca McDonagh, said customer loans stood at €79.1bn at the end of March, an increase of €2.1bn since the end of December 2018.

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The increase was primarily driven by corporate lending at home - including through acquisition - and retail loans in the UK. The overall rise was €600m on a constant currency basis.

Customer deposits were €79.7bn at the end of March - highlighting the extent to which the bank lending is financed from savers rather than the capital markets.

Meanwhile, operating expenses fell 3.5pc compared to the same period last year, according to a trading update from the bank.

Bank of Ireland's net interest margin for the period - a key barometer of a banks profitability - fell to 2.1pc from 2.2pc at the end of 2018. However, in a note analysts at Davy Stockbrokers said the bank's mortgage market share for the three month period was "weak" at 23pc.

"But activity levels on drawdowns and approvals increased as the quarter progressed, indicating that a recovery back to the target share range of 25-30pc should occur over the remainder of the year," analysts said.

Small business lending by the bank picked up despite a perception that nervous managers were waiting to see how Brexit played out before committing to new borrowing.

There was "activity, confidence and credit demand" among small businesses the bank said, with "positive momentum" continuing in the second quarter of 2019.

Since March 31, the bank has acquired KBC Bank Ireland's corporate loan portfolio of roughly €260m.

Bank of Ireland said last month that the acquisition, which is expected to close in the coming months, was consistent with its plans to grow its lending volumes.

Irish Independent

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