B of I posts 10% rise in yearly profits to €1.4bn

Bank of Ireland has reported a 10 per cent rise in profits to €1.4 billion in the year to the end of March with its Irish retail banking operations yielding the single biggest increase in profits.

The Irish retail division posted a 17 per cent increase in profits to €490 million. Notwithstanding this performance, the bank's chief executive, Brian Goggin, yesterday stated that this part of the Bank of Ireland group will be one of the key targets for its imminent cost cutting programme that includes 2,100 job losses.

Mr Goggin said that 40 per cent of the €120 million a year in savings it expects to achieve over the next three to four years will come from its retail bank. This suggests more than 800 jobs at its branches and other retail operations could go.

Some 10 branches are to be closed and 500 staff are to be redeployed from bank office to front office positions to ensure a high quality service to customers. Mr Goggin said that the job cuts will be sought across the entire organisation.

A further 40 per cent of the savings will come from the centralisation of support services such as procurement, facilities management and human resources. The remaining 20 per cent of the cuts will be sought through the consolidation of activities such as its credit services operations and call centres.

The scale of the job losses has angered many Bank of Ireland staff and the bank will continue negotiations on this thorny issue with the Irish Bank Officials Association today. These talks are expected to be concluded by May 30th.

Profits at the bank's wholesale financial services division, which includes Davy Stockbrokers and IBI Corporate Finance, swelled by 9 per cent to €407 million.

Bank of Ireland's asset management business continued to suffer though as it lost business due to poor performance. Its profits fell by 8 per cent to €115 million.

At the end of March it was managing assets worth €47 billion, compared with €57.5 billion in the previous year. Mr Goggin said that in April it was put on notice that a further €700 million in funds will be lost.

He described its difficulties as a short-term setback, saying it will return to profit growth in the next two to three years.

In the UK its financial service business achieved a 4 per cent increase in profits to €388 million while its link with the UK Post Office saw losses rise to €55 million. Mr Goggin said it will take this business a couple of years to move into profit.

The bank's results were broadly in line with market expectations. Bank of Ireland shareholders will get a 10 per cent rise in their dividend to 45.6 cent per share. Its share price closed at €12.20, down 2 cent.