The Republic's second biggest bank has reported a 28 per cent rise in pretax profits to €848 million in the six months to the end of September. Bank of Ireland chief executive Brian Goggin said he was confident that it would produce another strong performance over the next six months.
The bank generates almost 60 per cent of its profits from its Irish operations, with strong growth in mortgage and other lending and the implementation of a cost-cutting programme boosting its bottom-line.
Announcing its results yesterday, Mr Goggin said earnings would continue to grow.
"We are confident of continued strong performance and are expecting to deliver double-digit earnings growth for the full year, with this trend continuing into 2006 and 2007."
The bank's UK post office venture - UK Post Office Financial Services (UKPOFS) - posted a loss of €24 million in the period, although this included the amortisation of certain assets.
The bank's out-turn was broadly in line with market expectations. Earnings per share increased by 10 per cent to 57.3 cent, and the bank expects earning to increase by more than 10 per cent in the year to the end of September. Shareholders will receive a 10 per cent increase in their dividend to 18.2 cent.
Bank of Ireland shares closed down 15 cent at €13.05.
Its retail bank in Ireland achieved a 16 per cent increase in profit to €265 million. Lending, including mortgages and business loans, rose by 23 per cent during the six month period, while its deposit base increased by 16 per cent. Some 47 per cent of its loan book is made up of residential mortgage lending, with the bank saying asset quality remained good and it had substantial provisions against bad loans.
The bank said it had increased its share of the life assurance market from 24 per cent to 25 per cent, and that its key cost to income ratio in this division fell 3.5 per cent to 56.6 per cent.
Bank of Ireland aims to achieve €120 million cost savings a year by 2009, with Mr Goggin saying it was on target to achieve savings of €30 million in the current financial year. Some 400 jobs have been cut in Ireland already and by the end of March this will swell to 1,200, he said. The bulk of the positions that will be made redundant will come from streamlining support and processing functions, according to Mr Goggin. Meanwhile, the bank is recruiting 500 staff to deal directly with customers at its branch network.
Profits at its asset management division continued to be disappointing and were affected by the loss of €8.4 billion in funds during the half-year period. Profits declined by 27 per cent from €70 million to €51 million, with Mr Goggin saying it would take two to three years to turn the business around. "We have no quick fix solution. We have just got to work through it," he said. The bank had €43 billion in funds under management at the end of October, and has been given notice that it may lose another €1 billion in assets.
Bank of Ireland's UK division brought in 26 per cent of the group's profits of €164 million, largely unchanged on the same period last year. The division has been restructured and Mr Goggin said it was now poised for profit growth. The bank is focused on mortgages, business banking and consumer financial services through its joint venture with the UK post office.
