Banks show gains on Iseq

Wed, Nov 4, 2009, 00:00

The banks posted strong performances on the Iseq this morning in the wake of Bank of Ireland's financial report this morning.

AIB was up some 13 per cent in morning trading, while BoI powered up over 18 per cent - due to positive noises on BoI's funding side, according to a Dublin-based broker. Irish Life and Permanent was up over 10 per cent.

BoI today reported a pre-tax loss of €979 million for the six months ending September 30th, compared to a profit of €647 million last year, and impairment charges over that period of €1.8 billion

However, the bank's loan-to-deposit ratio fell to 152 per cent from 159 per cent a year ago, and the loss of €979 million is slightly better than some analysts' estimates.

BoI, Irish Life and Permanent, and AIB all finished well down at close of business yesterday following several days of falls.

The trend comes amid speculation that Irish banks may not be able to opt for rights issues until the New Year, and the decision by UK banking group Lloyds to raise £13.5 billion in the Britain’s biggest rights issue may make it hard for Irish lenders to raise additional capital.

Elsewhere, European shares rose today, with financials the major gainers and car makers in demand after Japan's Nissan revised its annual forecast to a profit from a loss and US car sales rose.

The FTSEurofirst 300 index of top European shares was up 1.2 per cent at 980.32 points, rebounding from the previous session's steep losses.

The benchmark index, which is up 17.7 per cent this year, has gained almost 52 per cent since hitting a record low in early March.

Financials featured among the major movers, with banks adding the most points to the index. Société Générale gained 4.7 per cent, boosted by solid third-quarter performance at its French retail banking division and more bid speculation.

Barclays, Banco Santander, BNP Paribas and UBS were up 2 to 3.7 per cent.

Shares in UK insurer Aviva climbed 5.6 per cent, after it posted an increase in surplus capital of £3.7 billion pounds in its third-quarter trading update as investors shrugged off a dip in sales.

Car shares were given a boost after Nissan Motors revised its annual forecast and US car sales rose yesterday.