B of I revises full-year earnings guidance upwards

Bank of Ireland has predicted earnings growth in the high teens for its full year following a strong performance in the first half.

The bank issued a trading statement yesterday before going into a closed period ahead of interim results for the six months to the end of September. These will be published on November 16th.

Bank of Ireland said that, following a robust performance in the first half of the year, it was revising its earnings per share (EPS) guidance for the 12 months to the end of March 2007.

"We expect to deliver high teens percentage EPS growth for the full year to March 31st on an underlying EPS of 118.5 cent for the full year to March 31st, 2006," the bank said.

Davy analysts Emer Lang and Scott Rankin reacted by revising up their earnings forecasts for the bank for both the full and half year.

The firm, which is currently owned by Bank of Ireland, now forecasts that the bank will deliver adjusted EPS (after one-off items) of 71.7 cent for the six months to the end of September, a 25 per cent increase on last year's figure of 57.3 cent.

For the full year, Ms Lang and Mr Rankin believe that the bank will deliver adjusted EPS of 141 cent, an increase of close to 20 per cent on the 118.5 cent declared last March.

The bank currently has a 90 per cent holding in Davy, but has agreed to sell it to the management for €310 million.

David Odlum and John Cantwell of NCB Stockbrokers described the statement as "very upbeat". They predicted that the bank's full-year earnings would hit 136 cent per share, 3 per cent ahead of their previous forecasts.

Investors reacted positively to the trading statement. Bank of Ireland shares closed 20 cent up at €15.20, a gain of 1.3 per cent, and the stock traded as high as €15.33 during the day.

The bank said that performance across the group should deliver income growth of 12 per cent. Davy expects the bank to deliver total first-half income of €1.85 billion and full-year income of €3.82 billion.

The bank's restructuring programme, which includes voluntary redundancies, is expected to deliver more than the €75 million in savings it originally predicted for the current financial year.

It also stated that the losses from bad debts for the first half of the year will be nine basis points (nine hundredths of 1 per cent).

Bank of Ireland said it expected its Irish branches to deliver 25 per cent growth in profit before tax. First-half profits from this division last year came to €268 million, while it delivered a €550 million surplus over the full year.

It predicted that weakened stock prices would reduce profits at its life assurance division by 6 per cent.

Wholesale financial services, which is about to subsume the bank's troubled asset management business to form a new capital markets division, is expected to deliver 45 per cent pretax profit growth.