Strong growth has BoI banking on record pre-tax profits of over €1.3bn

BANK OF IRELAND is set to deliver record pre-tax profits of over €1.3 billion when it announces its full-year figures tomorrow.

The bank has seen strong growth in its core mortgage business, where lending volumes have surged 26%, but lending to businesses and large corporates has also performed well and grown by over 20%.

But the markets are expected to look beyond the results and instead focus on getting further information on plans to axe 2,100 jobs in Ireland and Britain over the next three years. The plans, which were announced in March, aim to save the bank up to €120 million every year but have been vigorously opposed by unions.

NCB Stockbrokers said the bank’s retail division in Ireland would be the key driver of profits and would deliver a 17% hike in pre-tax profits, well ahead of the 5% bottom-line improvement for the group as a whole. Its life assurance business, which includes New Ireland and Bank of Ireland Life, is expected to be 10% ahead. NCB also predicted a 10% hike in profits at the wholesale division, which handles corporate and treasury business.

But bad news is on the cards from the asset management and British retail businesses. Asset management has suffered from the loss of several high-profile pension fund clients in North America. Fund managers withdrew over €10bn, almost a fifth of the total funds managed by the division, after it went through a prolonged period of underperformance.

This will hurt full-year profits by over €30m. The unit also witnessed the defection of four top executives who left to join an Australian rival.

The bank’s operations in Britain will come under renewed scrutiny, with only a “modest” increase in profits expected, according to NCB. A joint venture to sell personal loans and other financial services through the British Post Office has incurred significant costs but has yet to deliver.

The markets will also look for news on the bank’s strategy for Bristol & West, the former building society that has suffered from intense competition in the mortgage market.

The bank sold Chase de Vere, an independent financial advisory business in Britain, earlier this year for just €30m, a fraction of the €170m it had originally paid.