Bank of Ireland announce strong earnings despite market volatility

SHARES in the country’s biggest company, Bank of Ireland closed down 35 cents at €10.03 yesterday, after it announced strong earnings growth in the first half of its financial year against a background of difficult market conditions.

Some of these difficulties exist in retail banking in Ireland where loan losses as a percentage of average advances are expected to be slightly higher than in the same period last year. But Bank of Ireland said these remain satisfactory.

Two peripheral businesses are to go creating an exceptional charge of €25 million.

It expects operating profits for the first six months of 2002 to be ahead of last year, the bank said yesterday in a trading statement.

Profits In Ireland are expected to grow by a low double digit percentage, with good income growth, satisfactory asset quality and moderate cost growth for the half year to September 2002 compared to the same period in 2001.

Lending volumes are expected to record a low double digit percentage increase. Mortgage lending has been buoyant but other lending will show modest growth as a consequence of the economic slowdown. Resources volumes have performed well and are expected to show a low double digit percentage increase. The low interest rate environment and the more rapid growth in lower margin assets have contributed to some contraction in net interest margin, nevertheless mid to high single digit growth is expected in net interest income.

Cost growth is expected to be mid to high single digit with the national wage round being a major element.

Overall the bank expects to report high single digit growth in profit before tax for the six months to 30 September 2002.

The results are expected to reflect strong trading in the retail businesses in Ireland, continued excellent performances in the wholesale businesses and double digit profit growth in UK Financial Services.

The bank said cost and income growth is expected to be broadly similar, despite the adverse impact on income of current stock by the continuing market volatility.