Bank of Ireland made a pre-tax loss of €2.17bn for 2012 following an impairment charge of €1.72bn on loans.
This compares with a pre-tax loss of €190m for 2011.
However, the bank booked a €1.8bn profit in 2011 on the back of a liability management exercise.
The impairment charge for 2011 was 11% higher than last year.
Bank of Ireland is 15% owned by the State. It is by far the healthiest of the three pillar banks, although the chief executive, Richie Boucher, declined to say when the bank would return to profitability or when loan losses would normalise.
The removal of the Government’s eligible liabilities guarantee scheme at the end of this month will help boost profits for the year. Bank of Ireland paid €388m in guarantee fees last year compared with €449m for the previous year.
The bank had laid off 1,200 people by the end of last December and there was a provision of €57m for redundancies this year, although Mr Boucher declined to say how many employees would leave. More than 5,000 staff have left since 2008.
The bank’s net interest margin averaged 1.25% for last year, although there was an improvement over the second six months. The net interest margin averaged 1.2% for the first six months compared with 1.34% over the latter half of the year.
The loan-to-deposit ratio was 123% at the end of the year compared with 144% at the end of 2011. Bank of Ireland divested €10.6bn in assets last year. It has a loan-to-deposit target of 120%.
The bank agreed with the troika to sell its life insurance business — New Ireland — as part of the deleveraging process. It is a profitable business and there had been speculation that it would like to hold onto it.
“As of now you can take it that we will probably have to sell it,” Mr Boucher told a journalists’ briefing.
Bank of Ireland’s mortgage book is in much better shape than AIB or Permanent TSB.
Roughly 90% of customers are making capital and interest payments on a monthly basis, which leaves 17,000 customers in some form of arrears.
The cost-income ratio is 87%, which is a considerable amount above its target of 50%. The core tier one capital at the end of December was 14.4%.
The bank issued €250m of unguaranteed tier 2 subordinated debt with a 10-year maturity and 10% coupon last October.
In January the Government sold €1bn in contingent convertible bonds.
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