Bank of Ireland reports 30% jump in full-year profits

Profits jump to €1.2bn as bank says it will pay a dividend for the first time since 2008

New lending at Bank of Ireland rose by 40 per cent to €  14.2 billion in 2015, while the bank also reduced its non-performing loans by € 3.8 billion last year.

New lending at Bank of Ireland rose by 40 per cent to € 14.2 billion in 2015, while the bank also reduced its non-performing loans by € 3.8 billion last year.

 

Ciarán Hancock, Finance Correspondent

Bank of Ireland made an underlying pre-tax profit of € 1.2 billion in 2015, an increase of 30 per cent on the previous year, according to results just published.

The bank said all of its trading divisions were profitable last year.

New lending rose by 40 per cent to € 14.2 billion while the bank also reduced its non-performing loans by € 3.8 billion last year.

Bank of Ireland increased its Core Equity Tier 1 capital ratio by 200 basis points to 11.3 per cent. It has increased by 500 basis points in the past two years.

The bank also signalled that it would resume its dividend payment to shareholders. The bank has not paid a dividend on its ordinary stock since 2008.

Its aim is have a “sustainable dividend” and plans to re-commence payments in respect of financial year 2016. The initial payment would be made to investors in the first half of 2017.

The bank said shareholders should “expect dividend payments to re-commence at a modest level, prudently and progressively building, over time, towards a payout ratio of around 50 per cent of sustainable earnings”.

Commenting on the results, Bank of Ireland’s chief executive Richie Boucher said: “All of our trading divisions are profitable and contributed to our strong financial performance during the period.

“We continued to be the largest lender to the Irish economy, providing € 6.9 billion of new credit to personal and business customers in 2015. With our strong franchises, we are well positioned to meet credit demand which is recovering as the Irish economy grows and confidence returns.

“We have maintained our progress towards dividends and have updated our distribution policy. The strength and momentum in our businesses gives us confidence in the group’s prospects and in our ability to continue to focus on our duty to responsibly develop our profitable, long term businesses and better serve our customers, in a way that delivers attractive sustainable returns to our shareholders.”

The bank said the higher profit level was due to higher net interest income and fees, along with reduced loan impairment charges.

The result also reflected gains of € 237 million, primarily relating to the rebalancing of its liquid asset portfolio. It also reflects a € 30 million benefit from foreign exchange translation effects.

Bank of Ireland said it was the largest lender to the Irish economy with new lending of € 6.9 billion in 2015.

Its Irish mortgage business focussed on fixed rate products - which represented two-thirds of its lending in the second half of the year - with new volumes of € 1.4 billion in 2015.

The bank said it achieved a 31 per cent share of new mortgage business in the second half of 2015 and had a 27 per cent share of savings market.

In terms of larger businesses, the bank said it achieved new lending volumes of € 1.8 billion in 2015 and continues to win a 50 per cent-plus share of banking relationships with new foreign direct investors in Ireland.

Its net interest margin - a key indicator of profitability - increased by 8 points to 2.19 per cent. Its impairment charge for the year almost halved to €296 million.

The bank’s cost-income ratio was 53 per cent, albeit helped by its income benefitting from additional gains during the year.

The bank said the higher profit level was due to higher net interest income and fees, along with reduced loan impairment charges.

The result also reflected gains of € 237 million, primarily relating to the rebalancing of its liquid asset portfolio. It also reflects a € 30 million benefit from foreign exchange translation effects.

Bank of Ireland said it was the largest lender to the Irish economy with new lending of € 6.9 billion in 2015.

Its Irish mortgage business focussed on fixed rate products – which represented two-thirds of its lending in the second half of the year - with new volumes of €1.4 billion in 2015.

The bank said it achieved a 31 per cent share of new mortgage business in the second half of 2015 and had a 27 per cent share of savings market.

In terms of larger businesses, the bank said it achieved new lending volumes of €1.8 billion in 2015 and continues to win a 50 per cent-plus share of banking relationships with new foreign direct investors in Ireland.

Its net interest margin – a key indicator of profitability – increased by 8 points to 2.19 per cent. Its impairment charge for the year almost halved to € 296 million.

The bank’s cost-income ratio was 53 per cent, albeit helped by its income benefitting from additional gains during the year.