Bank of Ireland starts €125m share buyback

Bank of Ireland said on Tuesday it has started a €125 million share buyback programme, in line with a plan announced in March when the company reported full-year results.

The bank has hired Davy, its stockbroking subsidiary, to buy back shares under the programme before the end of June. Any stock bought will be cancelled, it confirmed.

The buyback follows on from Bank of Ireland’s repurchase of €50 million shares last year. The lender, in which the State sold its last remaining shares last autumn, also plans to pay out €225 million of ordinary dividends on last year’s earnings, bringing the total shareholder distribution to €350 million.

Group chief executive Myles O’Grady, who took charge last November, has set his sights on the bank posting profit returns between this year and 2025 equivalent to about 15 per cent of tangible equity that shareholders hold in the business. That is up from its previous 10 per cent objective and the 10.6 per cent out-turn for last year, excluding noncore costs.

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The bank said its net interest income in the first quarter was tracking in line with guidance that it would expand by more than 12 per cent – lifted by higher European Central Bank (ECB) rates on its surplus deposits, the bank’s purchase of loans from KBC Bank Ireland, and the passing on some of the ECB rate increases to borrowers.

Bank of Ireland took over €8 billion of loans, mainly mortgages, and €1.8 billion of deposits from KBC Bank Ireland in the first quarter as the Belgian-owned lender retreated from the market.

The ECB has raised its deposit rate from minus 0.5 per cent to 3.25 per cent since last July, including a 0.25 of a percentage point increase announced last Thursday.