Dividend payout by Bank of Ireland ‘getting closer’, says CFO

Bank of Ireland is "getting closer" to resuming a dividend payment to its shareholders, its group chief financial officer Andrew Keating told the Leinster Society of Chartered Accountants today.

Bank of Ireland suspended dividend payments in 2008, in wake of the banking crash and the State’s blanket guarantee of domestic financial institutions.

Mr Keating said a resumption of the dividend was a key agenda item when the bank met 50 investors and institutions last week as part of a roadshow in the US and Canada.

“The investors were focused on two particular questions - when are you going to pay a dividend and how much will it be? Our guidance has been very consistent - our first priority is to repay the preference shares in 2016 and thereafter to progress towards dividend payments.”

Mr Keating noted that the consensus view among analysts was that the bank would announce a dividend around the time of the publication of its full year 2016 financial results.

“I can’t confirm an exact timing on this as it is a decision for my board and for discussion with our regulators. However, the day when dividends will resume is certainly getting closer.”

Mr Keating also said Bank of Ireland expects to exceed its five-year target to lend €33 billion by 2017.

“June of this year was the half way point for that ambition and we are exactly in line with our original plans - 40 per cent of the target has been achieved to date,” he said.

“This means the bank has lent €20 million a day, every day for the past 2 1/2 years, supporting the ambition of our personal and business customers.

“However, it also means we need to increase our average lending over the next 2 1/2 years by 50 per cent to achieve our original target. We need to lend an average of €30 million per day every day for that period.

“Our latest projections ... indicate that we will exceed this level and thereby exceed our original target of €33 billion.”

He also reminded the audience that half of the bank’s balance sheet is held outside Ireland, primarily in the UK, where it has partnered with the Post Office and the AA.

“This year alone, we will sell more mortgages in the UK that in the whole of the Irish market,” he said.

Mr Keating reminded the audience that Bank of Ireland has repaid the State’s bailout funds of €4.8 billion in full, plus an additional €1.2 billion in fees, interest and other amounts.

In addition, the State owns 14 per cent of the bank’s shares. “ If the State sold these shares at today’s price they would be worth circa €1.6 billion and so, the total cash return to the State from its investments and support to Bank of Ireland would be €7.6 billion,” he said.

Bank of Ireland also holds €7 billion of Irish sovereign bonds, Mr Keating said.

“We have repaid and rewarded the support and investments from the taxpayer,” he said.