BANK of Ireland chiefs could be forgiven for being just a little bit bemused at the response in the market to the bank's half year results. The numbers came in right in the middle of market forecasts, but Bank of Ireland shares still lost 11p on the day. Why should Bank of Ireland be valued at £53 million less after results, which lived up fully to expectations but were admittedly short on surprises?
Profit taking was the predictable response within sections of the market which in the true herd mentality that characterises the Irish market saw more sellers emerge as a couple of overseas players began to unload stock. Bank of Ireland was not the only stock to be affected by the rush to sell the financials, with AIB also down a few pence on the day.
By any criteria, and particularly on a yield basis, the Irish banks still represent good value compared to the British clearers and compared to Irish gilts. There is no obvious reason why investors should sell at present, with both banks likely to continue to benefit from the buoyancy of the Irish economy in particular.
Most of the trading this week was concentrated on the financials and Irish Life, in particular, saw heavy turnover both before and alter the group announced that Mr Peter Fullam was head up a new development division with the apparent aim of speeding up Irish Life's expansion of its IFSC and North American operations.
Within the past year, Irish Life has done due diligence on two American insurers and chosen to walk away after inspecting the books. The IFSC expansion is likely to involve the acquisition of distribution channels into South Africa and the Far East.
Irish Permanent remained well bid at its recent highs, and the share's outstanding performance will be welcomed by the 114,000 shareholders who have stuck with the group ever since the flotation two years ago. Irish Permanent issued another 1.7 million loyalty shares this week on the basis of 15 shares for every shareholder who has stayed loyal.
One of the market's living dead, McIaerney Properties, was also given a transfusion and has now resurfaced as McInerney Holdings. That revival has involved ICC Venture Capital, putting up £2.5 million for a 28 per cent stake in the new McInerney in a placing of new shares that will raise a total of £6 million.
The question must be asked, however, as to whether it is necessarily the role of a State bank opperated venture capital company to rescue an ailing property and house building company. As for the existing shareholders in McInerney Properties, their share holdings will be diluted down to just 4.5 per cent of the restructured group although this could rise to 20 per cent if they participate in the claw back arrangement included in the placing.
DCC half year results may have come in ahead of forecasts but that has not done much to help a share that still suffers from a distrust in some quarters of industrial holding companies. DCC may be trading at close to its all time highs and come a long way off its 195p low, but it is still not far above its flotation price of a few years ago.
