Bank of Ireland shares continue winning streak after €1.2bn profit

The shares have risen spectacularly after the exit of rivals KBC Bank and Ulster Bank and since the ECB started hiking interest rates last summer

Bank of Ireland chief executive Myles O'Grady said that the Irish mortgage book is 'performing well' despite the inflation crunch.

Shares in Bank of Ireland have continued on a winning streak after the major lender reported an underlying profit of €1.2bn for 2022, helped by interest rate increases and the acquisition of the loan books from rival KBC Bank.

The bank's shares, along with those in AIB and Permanent TSB, have risen spectacularly after the exit of rivals KBC Bank and Ulster Bank, and since the European Central Bank started hiking interest rates last summer.

The lender said it will deliver €350m to shareholders in dividends and share buybacks based on the 2022 results and pledged to deliver for shareholders in future years. The Government sold down its remaining stake last year.

The shares, which closed up 2.5% in the latest session, have now climbed 20% since the start of the year, to value the bank at over €11.4bn.      

Its net interest income rose by 12% to almost €2.5bn, “reflecting higher customer balances, higher interest rates and business momentum”, the lender said.

Bank of Ireland was cleared last year by the competition regulator to acquire almost €8bn in loans from KBC Bank, as the Belgian-owned group prepared to shut its doors in Ireland. It also completed the acquisition of stockbroker Davy. 

KBC deal

The KBC deal helped Bank of Ireland to increase an already significant share of the Irish mortgage market to over 30% in the second half of the year, and to increase its deposits to €99bn, despite the economic shock caused by the cost-of-living crisis. It also posted its first net lending growth in business banking in over a decade.   

Bank of Ireland chief executive Myles O'Grady said that the Irish mortgage book is "performing well" despite the inflation crunch, but there was "some concern" over the office property market due to rising interest rates for developers and a decrease in demand for office space following the pandemic.                                

“Notwithstanding global uncertainty, Ireland’s economic backdrop remains supportive,” Mr O'Grady said.

Rate hikes by the European Central Bank help to boost the income that lenders generate and potentially boost profitability.

For the current 2023 financial year, Bank of Ireland forecasts that net interest income is likely to rise by a further 12%, and costs are likely to run at the same level this year as in 2022, it said.