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Pre-tax losses at BoI double to €1.25bn in first half

Pre-tax losses more than doubled to over €1.25bn at Bank of Ireland during the first six months of this year.

That interim loss figure was up from a tally of €556m for the first half of 2011.

Similarly, impairment charges — those which are set aside to cover underperforming loans — rose by nearly €100m, year-on-year, to €941m.

However, when measured on a rolling half-by-half basis, Bank of Ireland has seen an easing in impairment levels since the start of the year.

Additionally, the bank’s reliance on State support — via eligible liability guarantees — has fallen, by €6bn to €36bn, in the latest reporting window, with the bank saying it has “further initiatives” planned to lower this figure in the remainder of the year.

Bank of Ireland chief executive Richie Boucher said the bank’s impairment levels should now have peaked.

“While the Irish economy remains challenged and our impairment charges remain elevated, we expect the impairment charges to reduce from this level, trending to a more normalised level as the economy recovers,” he said.

“The pace of the reduction will be particularly dependent on the future performance of our Irish residential mortgage book and commercial property markets, as well as our own credit management initiatives.”

Mr Boucher said the first half of this year was a difficult environment in which to operate, characterised by elevated funding costs, very low official interest rates, and “considerable uncertainties in the eurozone”.

“Whilst the Irish economy has begun to stabilise, it remains a challenging environment in which to manage credit costs and sell new products,” he said.

Overall, customer deposits were up from €71bn to €72bn between the end of December and end of June.

The first half also saw a 26% year-on-year rise in underlying pre-tax losses to €907m, while pre-impairment operating profits amounted to €58m — 65% down on the €164m generated in the same period last year.

Underlying pre-tax losses at its core retail banking arm in the Republic rose from €373m in the first half of 2011 to €600m in the same period this year. The annualised first-half underlying loss in its UK retail division went from €114m to €173m.

Group operating profit for the first half was €900m, down from over €1bn a year earlier.

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