This Week: Bank of Ireland earnings expected to take positive turn

Elsewhere, FBD’s H1 results come in middle of an investigation into the firm

Monday

Results: Bank of Ireland, AerCap Holdings, Forterra, Caterpillar.

Indicators: Euro zone business and consumer confidence (Jul), consumer inflation expectations (Jul), services, economic and industrial sentiment (Jul); UK consumer credit (Jun), net lending to individuals (Jun), mortgage lending and approvals (Jun); German inflation (Jul).

Bank of Ireland’s earnings momentum is expected to take a positive turn as H1 results are announced on Monday, and much of the reason is a rise in new lending driven by the housing market.

In Q1, it reported growth in new lending of 20 per cent compared to the same period in 2017. By early 2018, the lender held a 28 per cent share of the mortgage market.

In a note ahead of results, Davy said it expected this market would continue to be a key lever of balance sheet growth.

“BOI’s approach to the mortgage market (fixed rate and cash back) has driven its growth share through 2017 and 2018; while we expect further cuts in new lending yields, its fixed-pricing strategy insulates it from material impact from an income perspective,” it said.

At a recent investor day, Bank of Ireland announced its intentions to grow net loans by 20 per cent over the next four years.

Environmental factors have also helped. Earlier this month, Goldman Sachs said credit growth in the Irish market would disproportionately benefit Bank of Ireland given its expanding distribution. It also noted the bank’s cost-cutting ambitions.

Meanwhile, recent data released by the Central Bank showed Irish mortgage holders were typically paying €2,500 a year more than in other European countries due to banking rates here.

Tuesday

Results: Pfizer, HeidelbergCement, Lufthansa, Naturex, Taylor Wimpey, Travis Perkins, Apple, Ralph Lauren, Procter & Gamble, Groupon, Time Warner.

Indicators: Irish unemployment (Jul); Euro zone inflation flash (Jul), GDP flash (Q2), unemployment (Jun); UK consumer confidence (Jul); German retails sales (Jun), unemployment (Jul); US persona income and spending (Jul), consumer confidence (Jul).

Meetings: Hibernia REIT AGM (Townhall, Windmill Lane, Dublin 2).

Wednesday

Results: FBD Holdings, Molson Coors Brewing, Fitbit, Ferrari, Garmin, Yelp, Tesla, Trip Advisor.

Indicators: Irish manufacturing PMI (Jul); Euro zone manufacturing PMI (Jul); UK manufacturing PMI (Jul); German manufacturing PMI (Jul); US manufacturing PMI (Jul), construction spending (Jun), vehicle sales (Jul).

Meetings: FED interest rate decision; Euro zone non-monetary policy meeting; Greencoat Renewables EGM (Davy House, 49 Dawson Street, Dublin 2).

FBD's H1 results on Wednesday come in the middle of an investigation into the company by William Fry solicitors.

Its appointment followed a complaint against chief executive Fiona Muldoon.

Unsurprisingly, the board is keen for the matter to be dealt with quickly – its share price dipped in the immediate aftermath of this coming to light. Following a press query, FBD issued a formal statement on the investigation at the end of June.

In it, the company said the matter had to do with “internal allegations made against the chief executive”, was ongoing and “conducted with due regard to the rights of all the parties involved. Ms Muldoon remains in her position”.

Before that story broke Davy had issued a note at the beginning of June commenting on the “gathering pace” of the company’s 2017 turnaround.

“Supported by a better underwriting performance, despite the slow pace of claims reform, growth is now a greater focus (as was evident in Q1),” it said.

It reiterated its “outperform” rating with a €12 price target.

Thursday

Results: Becton Dickinson, Kellogg, GoPro, Motorola Solutions, Revlon.

Indicators: Euro zone PPI (Jun); UK construction PMI (Jul), inflation report; US factory orders (Jun).

Meetings: Bank of England interest rate decision.

Friday

Results: Kraft Heinz.

Indicators: Irish services PMI (Jul); Euro zone composite and services PMI (Jul), retail sales (Jun); German composite and services PMI (Jul); UK services PMI (Jul); US exports and imports (Jun), non-farm payrolls and unemployment rate (Jul), composite and services PMI (Jul).