BoI shares in ‘key’ investor day in June

By Eamon Quinn

Davy Stockbrokers has upped the stakes for new Bank of Ireland chief Francesca McDonagh, saying the lender’s investor day next month — in which it will spell out its plans to analysts and investors — will be “a key catalyst for the stock”.

At €7.40, Bank of Ireland shares are little changed from a year ago and value the bank at little over €7.94bn, despite it commanding a near duopoly over lending and pricing of loans in the rapidly growing economy in the Republic. The shares of its only big rival, AIB, have however also underperformed for investors in the past year.

But Davy highlighted Bank of Ireland’s “material transformation programme” to invest €1bn between 2016 and 2020 for the the lender to become “a digital-led bank”.

The brokers said that the investor day, on June 13, will help the bank allay current concerns of investors.

“A key element of the programme is the replacement of its legacy core banking system with a suite of Temenos products and the delivery of a digital-led bank.

“Successful implementation of the programme will be a key driver”, the broker said for for the lender to achieve its costs targets.

Last month, Ms McDonagh and her fellow directors faced a barrage of criticism at its agm from shareholders over branches and unfriendly technology.

Davy said that the investor day was “a key catalyst for the stock and reiterate our outperform rating and €8.90 price target”.

The broker noted Bank of Ireland’s plans are set around a three-point strategy of transforming the bank; serving customers “brilliantly”; and on growing “sustainable profits”.

“We expect the investor day to elaborate further on these three priorities and, crucially, the financial targets to position Bank of Ireland in the coming years,” the broker said. One of the “uncertainties” the lender will address next month is its plans for its UK operations, where competition and the cost of deposits weigh on the bank, said Davy.

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