Bank of Ireland set for €1,214m profit

BANK OF IRELAND shares are deemed a buy as the company heads for profits of €1,214m, up 8%, driven by double-digit profit growth in Ireland.

Today, Bank of Ireland (BoI) will release a pre-close statement prior to its year-end on March 31. In-house stockbrokers Davy Bank expect the statement will reaffirm the bank’s defensive qualities. “Our forecasts envisage pre-exceptional pre-tax profits of €1,214m for the year ended March 2003, with earnings per share of 101c undiluted (100c diluted), which is up 8% on the previous year,” analyst Scott Rankin said.

A number of stockbroking houses issued pre-statement notes to clients, with Davy, Dolmen, NCB and Merrion all rating the bank a buy.

Dolmen’s Stuart Draper said: “Indications from EBS and Irish Life and Permanent are that mortgage lending in Ireland remains very strong in the early months of 2003. This should mean that strong double-digit earnings growth is continuing at Bank of Ireland’s Irish retail banking operation.”

Davy’s Rankin said that while the shares had bounced 9% over the past seven trading days, they remain buyers.

The dividend paid by Bank of Ireland to shareholders is also expected to increase by anything from 12% to 13%, depending on which stockbroking house you are talking to. Merrion’s Séamus Murphy and Elaine Brownlee said: “Although guidance on the dividend is not generally given at the trading statement stage, it is worth reiterating that a dividend of 37 cent is forecast for the period to March 2003, growth of 12% from the 2002 level.”

NCB’s John Kelly and David Odlum said retail banking in the Republic, 30% of group profits, is likely to remain a good performer, having increased pre-tax profits by 13% to €189m in the first half of the bank’s financial year. “Strong loan growth, particularly mortgage lending is likely to have been a key driver in the second half.

“Good cost control and asset quality are also likely to be evident,” they added.

NCB said that strategy outside Britain was clear.

“Trading update is unlikely to go into too much detail on strategy in the United Kingdom, aside from suggesting that organic growth and skills based approach (rather than scale & M&A) is the plan for the immediate future. Any positive noises on UK cost reduction plan and refocusing of mortgage operations would be well received,” they added.

The NCB duo said an update on the company’s pension status is also expected and the possibility the bank’s investment banking arm may be liable for about €12m relating to unreclaimable stamp duty on ADR share trades over recent years.

“Clarification of this issue would also be useful.

“AIB may be liable for around €8m also relating to this issue,” said NCB.