Bank of Ireland to cut over 1,000 jobs as losses rise
Bank of Ireland plans to cut more than 1,000 jobs to reduce costs further after reporting a sharp fall in operating profits before bad loan charges in the first half of the year.
The job cuts are part of the bank’s plan is to reduce annual costs to €1.5 billion from just over €2 billion in early 2009.
Chief executive Richie Boucher has, unlike rival AIB, ruled out any plan to close any of the bank’s 254 branches in the Republic of Ireland. The bank needed branches to sell new products to customers to increase revenues at the bank, he said.
Bank of Ireland had 13,400 staff the end of June, which has fallen by 3,700 from a headcount of 16,100 in early 2009. The bank set aside €66 million in the first half of the year to pay for the cost of further redundancies.
Mr Boucher declined to say exactly how many further jobs would go at the bank as the reductions would be based on costs rather than the size of the bank’s workforce.
The bank’s shares were down 5 per cent, or half a cent, to 9.3 cent a share this afternoon as Mr Boucher said it would be “very challenging” to meet its own target of raising its net interest margin, a gauge of profitability, to 2 per cent by 2014 after it fell to 1.2 per cent in June from 1.33 per cent a year earlier.
In a statement this morning, the bank said losses more than doubled in the first half of 2012 as the bank’s income from lending fell and provisions for bad loans increased.
In the six months to June 30th, the bank saw its pretax loss increase from €556 million in 2011 to €1.26 billion.
Impairment charges were €941 million for the six-month period, up from €842 a year earlier. Some €310 million of those charges were on residential mortgages; €387 million was on property and construction loans.
Net interest income, before the cost of the Government guarantee was taken into account, fell by €175 million.
Underlying losses at the bank reached €907 million for the first six months of the year, up from €722 million in 2011.
Operating income fell to €900 million, from just over €1 billion in the same period a year earlier.
Customer deposits at the bank remained reasonably stable at €72 billion, up from €71 billion in 2011.