Bank of Ireland shares continue decline in wake of mixed results
Bank said profit fell 13% although progress on cost cutting being made
Shares in Bank of Ireland fell as much as 8 per cent to €4.802 on Monday. Photograph: Frantzesco Kangaris/Bloomberg
Shares in Bank of Ireland continued their decline on Tuesday as investors digested an underwhelming set of annual results at the lender.
The Republic’s largest lender by assets dropped as much as 1.76 per cent to €5.015 in early morning trade on the Irish stock exchange.
On Tuesday, shares in the bank fell as much as 8 per cent to €4.802 after profits fell more than analysts had expected last year. Since the bank’s new chief executive, Francesca McDonagh, took the reins, its share price has collapsed by about 30 per cent.
Goodbody analysts noted on Tuesday that the “disappointing” results led to the broker cutting their earnings forecasts by 7 per cent, or about €70 million, for 2020. Nevertheless, Goodbody retained its “buy” rating with a price target of €7 per share. “Bank of Ireland does look cheap, so we retain our buy call,” the analysts said, adding that “it’s hard to see positive short-term momentum around earnings prospects.”
The bank is in the the throes of a shift with aims to grow its total loan book by 20 per cent, cut costs by €200 million to €1.7 billion amid a €1.4 billion information technology (IT) overhaul and restructuring plan, and boost returns.
The group made some headway on its plan to reduce its costs by 10 per cent by 2021 by reducing its workforce by 525 jobs, or 5 per cent, to 10,892 at the end of December.
Meanwhile, underlying pretax profits declined by 13 per cent to €935 million as its net interest margin – the difference between the average rate at which it funds itself and lends on to customers – narrowed to 2.2 per cent from 2.29 per cent.