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Bank of Ireland report underlying profit of €480m for first half of 2017

Bank of Ireland has reported an underlying profit of €480m for the first six months of this year, rounding off a busy week of results for Irish banks.

Bank of Ireland also reported operating expenses of €881m in the first six months of the year, which are broadly flat in comparison with the first half of 2016.

The bank said its residential mortgage lending in Ireland grew by over 30pc in the first half of 2017, taking its share of new lending to 26pc.

On the bank’s balance sheets, there was a €0.5bn increase in core loan books, with customer loans now standing at €76.9bn.
The amount of impaired loans at Bank of Ireland have reduced by €0.8bn during the first half of the year to €5.4bn. This amount is down 65pc from a reported peak in 2013 and account for less than 7pc of customer lending.

Non-performing exposures have also reduced in the first six months of 2017, by €1.3bn to a total of €8.1bn.
The bank reported new corporate lending of €1.9bn in the period.

In all, lending increased by €500m in the period to €76.9bn, meaning loans are now being drawn down or acquired faster than they are being repaid.
Net interest margin (NIM), a key measure of banks’ profitability, increased to 2.32pc in the first half of 2017, driven by lower costs. It’s the highest for any Irish bank.

Other income of €369m noted in the group’s income statement includes sustainable business income of €328m which increased marginally from the last six months in 2016.
Customer deposits of €74.7bn – predominantly retail sourced – account for over 95pc of the group’s funding.

Investments in IT infrastructure – the core banking platforms – reached €105m in the first half of the year, with €55m expensed to the income statement.
“Our customer base is growing and customer satisfaction scores are increasing as we invest in our customer propositions, in supporting business growth and in our infrastructure,” Richie Boucher, Bank of Ireland, Group CEO, said.

“The transformation of our business, enabled by our technology investments, to efficiently and sustainably align with the way our customers want to engage with us, continues to make progress.
“We are generating capital and increased our fully loaded CET1 ratio to 12.5pc. We expect dividends to re-commence at a modest level in the first half of 2018, in respect of financial year 2017.”

Today’s figures, from the first half of the year, will be the last set of results issued under departing chief executive Richie Boucher, who steps down in October.
He is set to be succeeded on October 2 by HSBC executive Francesca McDonagh.

On Thursday the High Court cleared the way for Bank of Ireland to resume dividend payments for the first time since the crash.

Davy’s analysts believe that the stronger than anticipated FL CET1 of 12.5pc should provide reassurance regarding the bank’s ability to recommence dividend payments.

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