Goodbody changes BofI to 'buy'
Goodbody Stockbrokers has changed its recommendation on Bank of Ireland to a “buy” having previously advised its clients to sell the stock. The re-rating follows the publication on Monday of Bank of Ireland’s full-year 2012 results.
In a research note sent to clients yesterday, Goodbody put a price target of 16 cent on Bank of Ireland, which closed trading in Dublin yesterday at 14.3 cent.
Goodbody analyst Eamonn Hughes noted that Bank of Ireland’s pretax loss of €1.8 billion for last year was in line with expectations.
However, he said the bank produced a better-than-expected net interest margin and strong capital ratios.
While Bank of Ireland’s average net interest margin for 2012 was 1.25 per cent, it improved in the second half of the year, with Mr Hughes suggesting an exit rate of 140 to 145 basis points.
“We are raising our full-year 2013 margin estimate by 10 basis points to 1.53 per cent and pre-provision profit is upgraded by €230 million to €912 million,” said Mr Hughes.
He said the “move to buy” was due to the bank being “well placed” to benefit from the “improving Irish macro story”.