Bank of Ireland’s UK division to cap mortgages at £500,000

Bank of Ireland's UK subsidiary will not offer mortgages for more than £500,000, according to Des Crowley, chief executive of the division.

He said this was designed to reduce the bank’s exposure to modestly-sized, multimillion-pound homes in expensive areas, notably in London.

"We're conservative in the London market, where it is quite heated and it is difficult for first-time buyers in particular to get on to the housing ladder," he told the Daily Telegraph following the release of the bank's UK results to the British media. "We wouldn't be doing many loans in Knightsbridge."

Bank of Ireland (UK) plc achieved a pretax profit of £224 million last year, up from £199 million in 2014. This included a profit of £41 million on the disposal of a business.

The 2014 profit figure included £30 million from the parent company in Ireland as part of the “agreed transfer pricing methodology”. No such income was received last year.

New lending volumes rose to £4.2 billion from £2.6 billion in 2014. It closed 2015 with a loan-to-deposit ratio of 89 per cent, down from 91 per cent in the previous year.

Its impairment charges fell by £17 million or 28 per cent during the year while its net interest margin was 2.11 per cent.

The bank closed the year with a Core Tier 1 capital ratio of 19.3 per cent, up from 12.7 per cent at the end of 2014, putting it well ahead of buffers required by regulators.

New lending

The bank achieved a 76 per cent increase in mortgage completions, with £3.3 billion of new lending, and expanded its network of new intermediary mortgage partnerships.

Bank of Ireland provides home loans that are branded and sold by the UK Post Office. It closed the year with £17 billion in savings balances from this partnership.

In Northern Ireland, Mr Crowley said the full service banking operating “continued to be profitable” last year. The bank achieved a 16 per cent increase in account openings in the small business segment.

In July 2015, Bank of Ireland launched a long-term financial services partnership in the UK with the AA, which brings a product portfolio of credit cards, personal loans, savings and mortgages to the association’s near 4 million members. Some 100,000 AA branded credit cards have already been issued.