Bank of Ireland increased its pretax profit last year by 28 per cent to a record €1.96 billion. The bank is on target to comfortably break the €2 billion profit barrier this year. Ciarán Hancock,Business Affairs Correspondent, reports.
This reflected strong double-digit growth across all of its divisions and tight control of costs.
In Ireland, profits rose by 27 per cent to €698 million. The bank achieved year-on-year loan growth here of 25 per cent. The bank said personal lending grew by 19 per cent, but rising interest rates had slowed new business volumes in residential property. Its net interest income in Ireland rose by 17 per cent to €1.3 billion.
Brian Goggin, the bank's chief executive, said fears about the health of the economy had been overplayed.
"While a great deal is written about the Irish economy, much of it is wide of the mark or just plain wrong," he said. "The economy in Ireland is actually in great shape and the medium-term prospects remain positive."
He said we were likely to see low single-digit increases in house prices over the next few years, while building activity would moderate to about 60,000 units a year. "This would be a positive development for the economy as a whole," he added.
He said 25 per cent of mortgage business in Ireland was first-time buyers, down only slightly on previous years. "It's proving to be exceptionally robust," Mr Goggin said.
In the UK, the bank increased its profits by 29 per cent to £299 million (€440 million). This division comprises mortgages, business banking and its joint venture with the UK post office.
B of I's capital markets business increased profits by 27 per cent to €572 million. Within this, however, its investment management arm continues to struggle.
Profits from asset management declined by 22 per cent to €66 million by the end of March.
The outflow of funds from Bank of Ireland Asset Management, once the jewel in the bank's crown, continued during the year. BIAM has assets under management of €43.7 billion at the end of March, compared with €45.1 billion a year earlier.
Mr Goggin said there would be no profit decline this year in asset management. "We've seen the worst in terms of profit declines," he said.
The bank said IBI Corporate Finance had a "satisfactory" year. Bank of Ireland netted €225 million from the sale of stockbroking firm Davy last October.
The court of B of I has recommended a final dividend payment of €39.4 cent a share, bringing the total dividend for the year to €60.4 cent. This represents an increase of 15 per cent.
Mr Goggin said the bank was unlikely to be a bidder for the Irish Nationwide building society when it comes on the market.
He declined to comment on progress with the Irish Bank Officials' Association on talks aimed at resolving a row over the introduction of a new pension scheme.
The bumper profits failed to support the share price, which fell by 3.1 per cent or 51 cent in Dublin to close at €16.01.
