Tuesday, February 21, 2012
Bank of Ireland posted a net profit of €40m in 2011; the first domestic bank to do so since the economic downturn took hold three years ago.
The profit was primarily as a result of one-off items such as a tax credit and a bond exchange.
In 2010, the bank made a net loss of €609m. On a pre-tax basis, the company cut its losses last year from €950m to €190m. The underlying pre-tax loss was just over €1.52bn; down from nearly €3.5bn a year earlier.
Chief executive Richie Boucher said that the bank is now in a position where the key focus is restoring its profitability.
Operating income amounted to €2.06bn; down by 27% on 2010’s figure of €2.8bn.
This was, according to the bank, due to the weak economy, the low interest rate environment, costs relating to the state-backed bank guarantee, high wholesale funding costs and competition for deposits.
However, Bank of Ireland’s loan-to-deposit ratio was boosted last year by it reducing the size of its loan book and boosting its deposit base by 8%.
That figure included a 2% increase in retail customer deposits in the Republic, despite the difficult market conditions.
The bank added that it is now more than halfway towards its three-year loan book deleveraging target, but said that any return to unsecured debt markets wouldn’t happen until after Ireland returned to the sovereign bond markets.
While not commenting directly on reports that US investor Wilbur Ross may increase his stake in the bank, Mr Boucher did say that management would be meeting investors in London and the US in the coming weeks.
Also during 2011 the bank reduced its dependency on European Central Bank funding, from €33bn to €23bn.
Mr Boucher said the bank’s management remains "very realistic" about its challenges, but that these are increasingly "business as usual-type challenges", rather than those seen in the upheaval of the last few years.
He added, however, that trading conditions in Ireland and Britain remain "challenging" and that the bank’s 2% by 2014 net interest margin target could be hindered by low interest rates.
"We remain focused on all of our targets and their achievement over time. We remain on track to meet our balance sheet restructuring and cost reduction targets within the previously envisaged time-frames," Mr Boucher said.
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