Bank of Ireland returns to profit

Share price unchanged at close of business after underlying profit before tax of €327m

Chief executive Richie Boucher (left) with chief financial officer Andrew Keating at the Bank of Ireland head office yesterday during the release of the group’s interim results. Photograph: Brenda Fitzsimons

Chief executive Richie Boucher (left) with chief financial officer Andrew Keating at the Bank of Ireland head office yesterday during the release of the group’s interim results. Photograph: Brenda Fitzsimons

Sat, Aug 2, 2014, 01:00

Bank of Ireland’s share price closed unchanged in Dublin yesterday at 27 cent as the company reported a return to profit.

Results for the first six months of this year show that Bank of Ireland made an underlying profit before tax of €327 million compared with a loss of €395 million for the same period of 2013. Higher net interest income, lower guarantee scheme fees and reduced impairment charges all contributed to the improved trading performance.

Impairment charge Its net interest income rose by 20 per cent to €1.16 billion while fees paid to the State for the eligible liabilities scheme reduced to €21 million from €99 million a year ago.

The bank’s impairment charge on customer loans fell sharply to €444 million from €780 million in the first half of 2013. The charge on residential mortgages reduced to €88 million, roughly one-third the level of the corresponding period last year.

The charge for property and construction also reduced but was still a hefty €215 million.

Bank of Ireland’s retail divisions in Ireland and the UK both improved their trading performance.

In Ireland, the retail division’s losses reduced to €28 million this year from €339 million in 2013. In the UK, the retail arm returned to the black, reporting a surplus of €57 million compared with a loss of €112 million a year earlier.

On mortgage arrears, Bank of Ireland said its number of owner occupier accounts in default of 90 days or more reduced to 9.5 per cent at the end of June compared with 10.1 per cent at the end of December 2013. This was due to falling unemployment levels and work by the group on restructuring loans, said the bank.

However, arrears on its buy-to-let book increased to 29.4 per cent from 27.7 per cent over the same period. This reflects the unwinding of interest-only repayment periods.

Bank of Ireland chief executive Richie Boucher said the macroeconomic outlook in the UK and Ireland is “more favourable” and the “growing momentum” in its businesses gives it confidence about the group’s prospects.

Increased salaries Mr Boucher also revealed that the bank is in talks with the Irish Bank Officials Association about designing a career path

for staff, which includes discussions on increasing pay.

“We always felt that as we moved to profitability we would need to discuss this with our employees,” he said. “Those negotiations are . . . going constructively.”