Davy reassures Irish banking stock investors

DOMESTIC and international investors in Irish banking stocks are being urged to keep the perceived increase in competition in the bank sector here in perspective.

Davy Stockbrokers says investors should not be overly concerned that an increase in competition could adversely impact on company profits or market prices.

According to Davy analyst, Scott Rankin: "New entrants to the market will undoubtedly grow their market share. However, one must note that they will be growing those shares off a low base. The only really new entrant into the market has been Bank of Scotland. Danske may technically be a new player here, but through its ownership of National Irish Bank, it's more a case of a new name over an existing door."

According to a new report from Davy 'Irish Banks: competition update' the first year of the industry's new personal current account (PCA) switching code did see more than 16,000 people changing their current account provider.

An unknown amount of people did so without using the code.

The Irish PCA market is dominated by AIB and Bank of Ireland, so most account switchers are going from them to other banks.

But Mr Rankin said: "AIB still managed to grow its own PCA base by over 30,000 during 2005. We also understand that Bank of Ireland did at least as well. Moreover, both grew their current account deposit base by at least a high-teens percentage."