Bank of Ireland sets date for dividend payout in 2017

Bank of Ireland reaffirmed it had set its sights on paying a dividend in 2017 for the first time since the crash, helping its shares claw back some of the large losses of recent weeks.

The stock market rout since the start of the year has hit European bank stocks hard, as fears mount the slowdown in the world economy could yet spill over to all banks.

However, in an upbeat presentation yesterday, Ireland’s largest lender said it would meet its own deadline to redistribute cash to shareholders.

It would start paying “at a modest level” its first dividend next year and increase the payment “prudently” over a number of years thereafter.

CEO Richie Boucher said a 30% jump in underlying pre-tax profit to €1.2bn in 2015 reflected profitable trading across all its divisions.

The bank will meet expectations to pay out over €200m in dividends based on 2016 earnings, early next year, said Darren McKinley, analyst at Merrion Capital.

As owner of 14% of the bank, that implies the Government gets over €25m next year and up to €70m by 2018.

Mr McKinley said significant headlines of the 2015 earnings included the value of the loan book increasing for the first time since the crisis, while non-performing loans were approaching “normal” levels for a bank operating outside a period of crisis.

John Cronin, head of financials research at Investec Ireland, said the market responded positively to the earnings.

Non-performing loans fell by €3.8bn through the year, the bank said, while its total loan book into Ireland and the UK — where it has a long standing tie-up with the Post Office — has risen.

In a media briefing, Mr Boucher gave little away about the housing market or the effects on the bank if the UK were to vote on June 23 to leave the EU.

The shortage of new housing remained a big feature of the housing mortgage market, he said, as he repeated the bank’s views that the year-old Central Bank home loan rules were good for the Irish economy.

He again defended the bank against critics of its high variable mortgage rates, saying the bank offers fixed-rate mortgages to both existing and new customers.

He said the British economy was resilient though the bank could be affected by volatility of the sterling exchange rate. He said that in Ireland and the UK, the bank was exposed to two high- growth economies.