BoI records losses of €1.5bn but says ‘key metrics moving in right direction’

Bank of Ireland’s net interest margin improved over the second half of last year to average 1.34% for the six months, according its interim management statement.

The bank made a pre-tax loss of €1.5bn for the year, although its chairman, Archie Kane, said all key metrics were moving in the right direction.

Speaking at Bank of Ireland’s AGM in Dublin yesterday, Mr Kane, said: “We have continued to make significant progress against our strategic objectives. We have remained focused on enhancing our core franchises and market positions and rebuilding towards profitability and value for our stockholders.”

He welcomed the removal of the Government’s eligible liabilities guarantee scheme. Moreover, there has been no impact on the bank’s deposit base on the back of the scrapping of the eligible liabilities guarantee or recent developments in Cyprus, added Mr Kane. The bank has reduced the level of assets covered by the scheme from €136bn in September 2008 to €26bn at the end of last December.

Customer deposits grew by 6% to €75bn. The loan to deposit ratio came down to 123% at the end of December from 144% at the start of the year. The loan to deposit ratio target is 120%.

Underlying loss improved by €327m — 36% — between the first and second half of last year. Impairment charges have reduced from €1.1bn in the first half of 2011, to €940m in the first half of last year to €780m in the second half of 2012.

“Reflecting the usage of funds from loan redemptions and transfers, the termination of the €3 billion IBRC Repo Transaction and a €1bn repayment of drawings under the ECB’s long-term refinancing operation , wholesale funding has reduced by €6bn from 31 December 2012 to €33bn currently.

“All of the group’s monetary authority drawings are under the long-term refinancing operation and since 31 December 2012 have reduced to €11bn of which €4.4bn relates to Nama bonds,” the bank said.

“Our actual capital ratios remain robust with a group core tier 1 ratio of 13.8% at 31 March 2013 — compared to 14.4% at 31 December 2012 — and includes, with effect from 1 January 2013, the anticipated regulatory deduction — with a ratio impact of 0.6% — relating to the group’s investment in its life and pensions business,” it added.