Bank of Ireland sees main opportunities for expansion in UK

Bank of Ireland views the UK market as its main source of future expansion opportunities, chief executive Mr Michael Soden said yesterday.

Mr Soden said it would be "preferable" for the bank to invest its surplus capital in the Republic, but acknowledged that any such move would face substantial competition barriers.

"Consequently, we're looking at the UK market," he said, describing the bank's UK operations as "a very, very real, major part of the business".

Mr Soden was addressing a briefing on Bank of Ireland's interim results, which had been mistakenly released to the market a day early on Wednesday. Pre-tax profits were shown to have risen by 7 per cent to €642 million.

Analysts were broadly positive on the numbers yesterday but nonetheless questioned their ability to offer a fillip to Bank of Ireland's stock, which has been sluggish of late.

Analysts also predicted that the Republic would remain the true engine of growth behind the bank, regardless of developments in the UK.

The bank's shares closed at €10.65 last night, six cents lower than the previous close.

Mr Soden said he believed the "true value" of the group would be reflected in the market over time.

The bank's rolling share buyback programme remains in place and should provide some support to its shares over coming months, particularly since it appears to rule out the potential for risky acquisitions.

With reference to the Royal Bank of Scotland takeover of First Active, Mr Soden said Bank of Ireland was "not at all fearful" of competition in the Irish market.

The UK currently provides 29 per cent of Bank of Ireland's group profits, but this could rise over coming years depending on the success of its new £125 million sterling (€180 million) joint venture with the UK Post Office.

The bank will begin selling personal financial products through some 200 Post Office outlets in January and will then gradually increase its penetration of the 16,900-strong network.

Mr Soden said the benefit of the Post Office deal would be "leveraged", with profits unlikely to be generated for at least 18 months.

The bank has appointed its director of retail strategy and change, Mr Patrick Waldron, as chief executive of the venture.