€700m swing in fortunes as BoI reports pre-tax profit

Bank of Ireland saw more than a €700m positive swing in fortunes in the first half of the year, generating an underlying pre-tax profit of €327m.

For the same period last year, the bank delivered a corresponding loss of €395m.

Full pre-tax profit actually amounted to €399m — compared to a loss of €516m at the same time last year — after a one-off gain of €87m linked to changes in the bank’s defined benefit pension scheme and other non-core items are included.

The bank’s chief executive, Richie Boucher said the lender’s financial performance is “a function of the actions we have taken and are continuing to take, as well as the improving macro-economic environment”.

“We are seeing positive momentum across our Irish and international businesses,” he added.

Even with each of the main Irish banks showing a swing back into profit, in the first half, Mr Boucher struck a cautious note regarding getting too carried away with the recovery.

“Things are looking a lot brighter for the economy, as a whole, and we’re moving in the right direction, but you can’t become complacent in anything you do and there will always be opportunities and challenges,” he remarked.

Mr Boucher — who is set to step back from the day-to-day running of the bank for a month or so, as he undergoes from cancer surgery — said that BoI also grew its total income by €290m — 24% on a year-on-year basis — aided by higher net interest income and lower bank guarantee scheme fees.

In response to a direct question on the matter, Mr Boucher said BoI will not restart making dividend payments to shareholders before 2016, with the de-recognition of the former State-owned preference shares in the bank, which still have a 10% coupon attached, a priority.

Mr Boucher said recent good momentum should be maintained, in the second half, with impairments set to continue to reduce.

Regarding the ECB bank stress tests — later in the year — he said the bank is not complacent about the process, but suggested confidence in passing the examination, with the bank maintaining a core tier-1 capital ratio buffer of 10%.