Bank of Ireland dividend plan more than covered by UK payment
UK subsidiary’s pretax profit declines to £151 million
New customer lending by Bank of Ireland’s UK unit increased by 12 per cent last year to more than £4.5 billion, in spite of Brexit uncertainty.
Bank of Ireland’s plan to pay out a €124 million shareholder dividend in the coming months has been more than covered by a payment the group received from its UK unit last year.
The group, led by chief executive Francesca McDonagh, said on Thursday that its UK subsidiary’s pretax profit declined to £151 million (€173 million) last year from £193 million in 2016, “reflecting increased investment in the business, changes to product portfolios and ongoing competition in the UK consumer lending market,” it said. Still, Bank of Ireland (UK) plc paid a £160 million dividend to its parent last year – almost 50 per cent more than the wider group’s planned first dividend payment to shareholders in a decade, announced late last month.
The UK business paid a £220 million dividend to its parent in 2016, the first since it was incorporated as a standalone subsidiary in 2009. About 40 per cent of the group’s €78.5 billion end-December loan book was comprised of UK borrowers. The UK unit’s new customer lending increased by 12 per cent last year to more than £4.5 billion, in spite of Brexit uncertainty.
The increase mainly comprised new mortgages, through the intermediary channel and its UK Post Office joint venture, where it has 2.4 million customers and savings balances of £13.9 billion. The company’s second year of partnership with the AA has seen it build up 150,000 new customers and a loan book of £350 million.
Des Crowley, chief executive of Bank of Ireland UK , said: “Our financial performance reflects the increased investment we have made in our business, as we have continued to transform the customer experience through technical innovation, digitisation and product development.”
The Bank of Ireland group is currently in the middle of a €900 million information technology overhaul.