BoI set to announce British strategy

BANK OF IRELAND is expected to announce a major new strategy for its British operations, Dolmen Stockbrokers said yesterday, speculating that the move should be well received by the markets.

Dolmen analyst Stuart Draper in a note to clients yesterday said Bank of Ireland (BOI) is likely to announce a new strategy for its UK operations in the last week of September.

“As a result of perceived deal risk concerning this part of the group’s strategy, any concrete plans announced for this division could be particularly well received by the market,” he said.

And yesterday Bank of Ireland disclosed it has re-purchased 120,000 shares yesterday at an average price of €0.75 per share. Since its interim results in May the company has bought back 17.8m shares at an average price of €10.58, this represents 1.8% of its outstanding capital or €188m.

Commenting on the buyback Mr Draper said Bank of Ireland, unlike AIB, whose share buyback programme is now largely complete for 2003, still has plenty more ammunition left.

“With c.€190m spent on buybacks since its full year results in May, BOI could comfortably do a further €210m over the remainder of its current financial year.

“In addition to any technical support which this activity may provide for the share price, the buybacks continue to increase BOI’s return on equity and earnings per share,” he said. Mr Draper also believes that the share price could also benefit as international sentiment towards the Irish banking market starts toimprove.

“A report from a major international house expressed confidence that continued double digit earnings growth was achievable by Bank of Ireland’s domestic retail operations in the medium term, driven by strong loan growth and robust asset quality,” he said.

“The consensus current year eps of €1.01 and forward eps of €1.10 still look very achievable, given that 99.2c was generated last year, and that weak equity markets cost BOI c.8c in eps last year.”