Bank of Ireland CEO monitors fallout on Irish inflation from Ukraine conflict
Francesca McDonagh, Group CEO Bank of Ireland.
Bank of Ireland faces no direct hit from the Ukraine conflict but most corporate and personal customers will be affected one way or another as further price inflation works through the Irish economy, CEO Francesca McDonagh has said.
The bank is screening the sanctions list to comply with Western transactions on Russia as markets absorb what the conflict will mean for oil and gas and imported grain prices in Ireland, Ms McDonagh said.
There is renewed pressures on Irish inflation, as wholesale oil and gas prices have surged again over the Ukraine invasion, she said.
Ahead of the events of the last two weeks, Bank of Ireland Ireland had forecast that inflation, which is running at 5%, would average 4.7% through the year, before easing back to 2.5% in 2023.
Facing into a potential new round of price pressures, she said the outlook for customers to cope was mixed, with customers whose jobs were affected by the Covid crisis likely to be relatively worse affected. For the bank's corporate customers, higher grain prices because of Ukraine could affect agri-firms, but that overall, companies were in a good shape to withstand the pressures, she said.
Ms McDonagh was speaking to reporters after it unveiled what it hailed as the strongest earnings since the financial crisis over 10 years ago. It posted an underlying profit of €1.4bn and said it had enough capital to pay shareholders dividends and buy back shares.
The bank is waiting approval from the competition regulator for major acquisitions after a tumultuous year for the Irish banking industry, as Ulster and KBC prepare to quit the Republic. Bank of Ireland is due to be a major beneficiary, with plans to secure €8.8bn in mortgage loans and €4.4bn in deposits from KBC.
Experts believe the competition watchdog, which is carrying out a full Phase 2 probe, will impose some sort of conditions on the proposed Bank of Ireland transaction.
Asked whether customers of Ulster and KBC are being asked to do too much to facilitate switching to new banks, Ms McDonagh said it would be a challenge for the banking system, adding that the industry was working on awareness campaigns.
The bank is also waiting approval for its €440m plan to purchase most of Davy after the broker put itself up for sale following the scandal over a 2014 bond sale.
