Tuesday, February 21, 2012
Bank of Ireland is set to make more property repossessions this year, as the level of mortgage arrears among its customers continues to climb.
Despite this, the bank has said that its overall loan losses are likely to start declining this year.
Speaking yesterday at the publication of the group’s annual results, chief executive Richie Boucher said that loan losses in Bank of Ireland’s Irish mortgage book "might" increase, while repossession levels — while still low — "will definitely increase, but the vast majority will still be on a voluntary basis".
According to the bank’s latest figures, 5.6% of its Irish mortgage book is in arrears for more than 90 days; up from 3.76% at the end of 2010.
This compares to an industry-wide average of 9.2%. The company had 99 properties in possession at the end of last December, up from 65, 12 months earlier.
Mr Boucher said the continuing low level of repossessions is due to an increasing number of customers engaging with the bank over a restructuring of their loan at an early stage. He added that the bank has in place "sustainable solutions" to support customers who are in financial difficulty.
He said that arrears in the Irish mortgage book didn’t peak in 2011 and might increase further in 2012, but should peak this year.
However, Mr Boucher added that, despite the bank’s overall loan losses remaining elevated (and rising marginally) in 2011, "we expect them to reduce from here; but that will be dependent on the wider economic recovery". Bank of Ireland’s loan impairment charges rose by 4% last year to nearly €1.94bn. Nearly 70% of its overall impaired loans comprise investment property loans, with 16% relating to residential mortgages and a similar percentage made up of SME lending.
Bank of Ireland has cut its staff numbers by 7% (and costs by 8%) to 3,700 as part of its restructuring process.
Bank workers’ union, the IBOA, said yesterday Bank of Ireland’s viability plan is being undermined by "unwarranted interference" by the Department of Finance.
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