Bank of Ireland: No plan to sell loans

Geoff Percival

Bank of Ireland has said it has no plans to sell non- performing mortgages and continues to make progress in lowering the amount of borrowers in arrears.

“We have zero plans to be acquiring or disposing of non-performing exposures,” said chief executive Francesca McDonagh, adding that progress has been made on reducing non-performing loans and improving the bank’s asset quality.

Her comments followed last week’s news that Permanent TSB is set to sell around 14,000 loans and Ulster Bank is considering offloading around 7,000, amid calls for the Government to regulate vulture funds who buy up mortgages from Irish banks.

Ms McDonagh was speaking on the back of Bank of Ireland’s latest set of annual results, which showed a flat underlying profit of €1.08bn, but strong lending growth and, as promised, a first annual dividend for a decade. That proposed dividend of 11.5c per share — to be voted on by shareholders — represents 18% of earnings.

The bank said it intends to keep growing the dividend “prudently and progressively” over a number of years until it reaches 50% of earnings.

Bank of Ireland’s share price fell by over 3.3% on the flat profit figure, a cautious outlook for net interest margin improvement and an expected slowing of loan impairment reversals this year.

Analysts are awaiting a planned investor day in June, during which the bank’s management team is expected to expand on its strategic priorities and growth ambitions.

The bank grew its new mortgage lending by 41% last year, upping its share of the residential mortgage market to 27%. Non-performing loans reduced by 31% to 8.3% of its loan book and the bank said it is planning to re-enter the mortgage broker market, which it said reflects the momentum in the market.

Ms McDonagh said 92% of overcharged tracker customers have been offered redress and that the bank will incur a total tracker scandal charge of €170m, which is unlikely to increase.

That charge meant after-tax profit rose from €692m to €799m last year, as overall impairment charges fell from €176m to €15m.

Ms McDonagh said she wants to make Bank of Ireland the “national champion bank” in Ireland and to improve its business model and how it serves customers. She said she is “very supportive” of the “normalisation” of the banking sector and wants to see more diversification on the Bank of Ireland board.

She said Bank of Ireland’s UK consumer banking arm hasn’t been affected by Brexit uncertainty and that it will report — in line with new UK banking laws — its gender pay gap figures in April.

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