Much done by confident Boucher but promised land still a distance away
LIKE a celebrity addict who has finally cured his drug habit and left his dark past behind, Bank of Ireland seems to be happy munching carrots and getting to bed at 9pm every day.
Yesterday, chief executive Richie Boucher gave every impression that the bank had forgiven itself for past misdemeanors and betrayed his impatience with taxpayers still struggling to grant absolution following the bank's expensive decade-long bender.
Bank of Ireland has changed some habits. There are new and smaller headquarters, pay freezes, job cuts and a relentless focus on the cost, but you can't go from the rock 'n' roll lifestyle to yoga and pilates overnight.
There are traces of the old days to be seen in the still massive salaries paid to the top brass, the €4m art on the walls, the €500,000 box at the Aviva Stadium and free golf club memberships for staff.
Mr Boucher waved away questions about free membership of sports clubs, looking for sympathy for a 10pc cut in salaries for senior managers.
Asked whether 10pc was adequate considering the bank's miserable performance over the past few years, the €623,000-a-year chief executive was reduced to repeating their mantra that "we review our salaries and benefits on an ongoing basis" like a dalek.
In fairness, it has been an extraordinary six months for the bank, with two stress tests, a capital raise and the European Commission's response on restructuring.
Despite these time-consuming challenges, which have all been met, Mr Boucher and his colleagues have taken decisive action to restructure the bank's pension system, renegotiate outsourcing contracts and draw up plans that will see staff numbers shrink by 1,500 by the end of next year.
One only has to look at Allied Irish to see that none of this was inevitable. This is why Bank of Ireland's capitalisation is more than four times larger than its long-time rival.
While these achievements are impressive and help to explain the bank's impatience with carping about residue extravagances, yesterday's results also show the bank is still a long way from the promised land it believes it will reach in three years.
The net interest margin fell to 1.41pc in the first six months of the 2010, pushing the bank further from its 1.75pc target for 2013.
The cost/income ratio was also headed in the wrong direction, moving to 61pc from 56pc and taking the bank even further away from the 50pc target. The group loan-deposit ratio advanced to 143pc, a long way from the 125pc target.
While Mr Boucher said he saw no sign of renewed weakness in the economy, the economic assumptions underlying yesterday's results are sobering and far gloomier than the Government's outlook.
Unemployment is seen averaging 14pc this year (which means the rate will have to climb a good bit higher than this to produce this average) while gross domestic product is not expected to start growing until next year. Most economists say it will resume in the second half of 2010.
House prices are also seen falling another 10pc from their peak, bringing the total decline to 45pc. The bank believes prices have only slid 35pc so far.
With access to wholesale funding remaining difficult, many key metrics heading the wrong way and an economy still some distance from recovery, the bank faces many challenges if it is to reach the promised land in 2013.
It has even further to go before the public view the bank with the same rose-tinted glasses Mr Boucher was wearing yesterday.