BOI forecast push shares up 27c

BANK of Ireland issued its pre close statement to the markets yesterday forecasting Earnings Per Share in the mid to high single digits before exceptional charges.

Markets reacted swiftly to the news pushing up the bank’s share price by 27c to €10.59 on the day.

This year the stock reached a high of $11.85 and a low of €9.09.

Brokers said the report contained no surprises, which reassured the markets.

For the year to March 31 2004 NCB Stockbrokers put the EPS figure at 106c per share.

That implies a 6% rise in the EPS and fractionally ahead of the earlier forecast from Davy Stockbrokers.

Davys is owned by Bank of Ireland and also act for the bank.

Strategically in the key domestic market Bank of Ireland is seen as having the edge over arch rival AIB Group.

It makes 59% of its pre-tax profits in Ireland while the figure for AIB is about 55%.

Primarily however the Bank of Ireland Asset Management subsidiary has outperformed all other asset management teams over the long term and that is seen as critical to the bank’s superior earning powers in the years ahead.

It has failed miserably in Britain to extend its reach and its mortgage subsidiary there will struggle without greater distribution to boost its potential earnings base.

Royal Bank of Scotland’s purchase of First Active some time back and the threat of more open competition suggest some vulnerability down the line also in the home market.

However the outlook for the Irish economy is still positive and any threat to earnings could be overcome by higher sales.

Critically margins have held at 2.2% equalling the first half performance.

All divisions have performed well and it expected to report mid to high single digit percentage growth in pre-tax profit before exceptionals.

“The continued upturn in world equity markets has had a positive influence on both our Asset Management and Life and Pensions businesses”, the statement added.

It said its loan book continues to benefit from the benign economic and interest rate environments in its main markets and predicted that these conditions will prevail for the year ahead.

Bank of Ireland said it expected an exceptional charge of £65m sterling for the write down of the remainder of the goodwill associated with the bank’s Chase de Vere operation.

Its retail operations in the Republic were expected to report good growth in profits and strong volume increases. Asset quality is continuing satisfactory and costs are well contained.