Bank of Ireland goes from €1.9bn profit to €7m loss – in 12 months
If the impact of non-core items of €339m are excluded from the figures the bank made an underlying profit of €339m, which is still a fall of 80% year on year.
Recently appointed group managing director, Richie Boucher, described the 12 months just gone as “one of the most difficult years Bank of Ireland has ever experienced”.
The results were broadly in line with market expectations.
The €6bn worst case bad debt scenario over three years will now be the full hit to the bank, in the wake of the property collapse in the three years to end March 2011.
The €6bn provision will be increased further if the current economic forecasts on which the figures are based deteriorate further, said chief financial officer John O’Donovan.
O’Donovan rejected suggestions during the press launch of the results that the bank’s forecast could not “be trusted” given its dismal record since this crisis broke last year.
Pervious indications on bad debts provisioning were done “on the basis of the economic forecasts in the public domain” at the time, he said.
Mr Boucher who replaced Brian Goggin as chief executive some months ago admitted to making “some mistakes” in his prior lending roles within the group.
The results showed that the total loans to customers were down 1%, reflecting weak demand in the economy while the customer deposits fell 4%.
Up to €34bn of lending on its books at present is for property investment and development and accounts for roughly a quarter of the banks lending of €136bn.
Roughly half of the €1.4bn bad debt charge resulted from lending in Ireland.
On the future, Mr Boucher said the most important tasks ahead for him as chief executive was to provide “stability” for the group.
That was his main concern, he said.
On the National Asset Management Agency the bank was fully committed to ensuring the mechanisms being proposed would be fair to all sides and free up the banks to start lending for business and commercial purposes.
He also denied earlier reports that the bank was not passing on interest rate cuts to its business clients.
Overall he said he was confident that after months of “close co-operation” with the State on the bad debt crisis he expected the assets to be transferred from the books of the banks would be fairly priced, despite the current difficult circumstances facing all sides in that regard.
