Saturday 24 August 2019

BoI shares drop more than 5pc on UK strategy doubts

Traders work on the floor of the New York Stock Exchange (NYSE)
Traders work on the floor of the New York Stock Exchange (NYSE)

Donal O'Donovan/Reuters

The ISEQ index weakened yesterday, with a sharp drop in Bank of Ireland among the notable declines.

Bank of Ireland shares fell as much as 5.5pc yesterday, as a decline following the unveiling of a new strategic plan on Wednesday gathered pace. Yesterday's fall was the biggest since March for the bank.

Analysts are sceptical about some of the detail in Wednesday's plan - in particular targeted loan and margin growth in the UK.

"We still remain unconvinced by the bank's UK platform and strategy and see greater risks in this loan growth strategy versus the plans for growth in Ireland," KBW analysts including Daragh Quinn say in a research note.

The "loan growth targets in the UK and corporate (lending) are too ambitious, whilst we are also less bullish on fees," Goodbody analyst Eamonn Hughes said in a research note.

A raft of Irish shares were under pressure yesterday, including domestically focused Dalata, Cairn Homes and Glenveagh, and export-oriented Glanbia.

Globally, US stocks fell and bonds surged as President Donald Trump moved the country closer to a trade war with China, while investors weighed diverging monetary policies from the Federal Reserve and European Central Bank.

The S&P 500 Index dropped yesterday, erasing its weekly gain, after the US announced a list of $50bn of Chinese goods targeted for tariffs and China said it would have to respond.

Trade-sensitive sectors including tech hardware led the decline.

Energy firms also got hit by a drop in oil prices. The Stoxx Europe 600 Index also headed lower.

"It doesn't look like investors really believe we're going into a full-blown trade war, but we're going into a full-blown trade skirmish," said Kim Forrest, senior portfolio manager at Fort Pitt Capital.

Ireland generally outperformed others, down 0.63pc, while the Stoxx Europe 600 fell 1pc, the FTSE 100 Index sank 1.7pc and Germany's DAX decreased 0.7pc.

Irish Independent

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