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BoI reports pre-tax loss of €979m but sees share price recover

BANK of Ireland has reported an underlying pre-tax loss of €979 million for the first half of its financial year; but saw its share price recover strongly yesterday on the back of saying its loan losses shouldn’t deteriorate from its previous guidance, over the next three years.

Results for the bank — covering the six months to the end of September — also showed an 18% year-on-year fall in operating profit (before impairment charges) to €787m; a fall from 63.2c to 2.4c in basic earnings per share and an underlying loss per share of 96.6c compared to underlying earnings of 54.8c a year earlier.

The pre-tax loss of €979m (the bank posted a total loss of €7m for its last full year) was driven by a €1.8bn impairment charge to cover potential losses on "bad" loans.

However, the bank’s share price — which had fallen by over 50% in value over the past week — was up by 24.56% yesterday (a gain of 34c to €1.75) on the back of it saying it has seen an easing in the economic downturn and doesn’t think that its previous guidance of €6.9m in loan losses, for the three years to March 2011, will need to be negatively amended.

It added that profits generated from its core businesses should be sufficient to absorb future impairment charges.

"Trading conditions throughout the first six months of our financial year have remained difficult. While we have seen some early indications of a slowdown in the pace of economic decline in Britain and to some extent in Ireland, the outlookremains challenging," said Bank of Ireland chief executive Richie Boucher.

On a divisional basis, its core retail Ireland business saw a 40% year-on-year slump in operating profit to €263m; while Bank of Ireland Life increased from €3m to €57m.

Management said it remained committed to its British business (its joint venture with the Post Office there currently has two million customers), although first half operating profit fell by 9%.

Meanwhile, the bank said that customer deposits rose by 4% in the first half and that in the period, it lent €1bn worth of mortgages and has approved 350 mortgages per week; although 10% of its mortgage customers (approximately 21,000 people) are in negative equity.