Bank of Ireland's share price fell by more than 2.5 per cent yesterday despite issuing a trading statement that brokers described as "upbeat".

Dealers on the Irish Stock Exchange said investors had been hoping the bank would raise its forecasts, but the bank's pre-close statement said it expected earnings per share (eps) would be in line with the current market consensus of 144.4 cent, up 22 per cent on the previous year.

The stock finished down 45 cent at €16.70.

Earlier in the day, banking analysts at Davy Stockbrokers said momentum across the group looked strong, but that the failure to raise guidance on its eps could disappoint the market.

"Having said that, investors will still expect the bank to come in a cent or two ahead on results day," Davy commented.

Bank of Ireland said it had made progress over the past year in implementing its programme of strategic change and that it expected to deliver greater savings in the current financial year than its target of €75 million.

An increase in total group income of 12 per cent is set to outpace an expected 5 per cent growth in costs during the bank's financial year, which ends on March 31st.

Margins at the bank are not falling by as much as analysts had anticipated.

The bank pointed to a slowing down in the property market in the early part of 2007 as a result of rising interest rates, but said it expected growth in its mortgage business to be in line with the market.

Although concerns about the residential property market were also flagged in recent comments from Irish Life & Permanent and AIB, Bank of Ireland's statement could "heighten investors' concerns", according to NCB Stockbrokers, which described the trading update as "solid".

The bank said it expected its capital markets division to deliver a strong performance, with corporate banking acting as a major driver of growth as it continues to expand internationally.

"Asset quality remains excellent and our loan-loss charge will also be positively impacted by provision write-backs," the bank said.

Its UK business also continues to perform strongly, as a result of a healthy housing market and the bank's well-established position in the specialist mortgage market.

Margins in its UK mortgage book have remained stable, while the bank's joint ventures with the UK post office are performing in line with expectation, the bank said.

Goodbody Stockbrokers left its eps forecast unchanged at 145.2 cent, while NCB Stockbrokers stuck with its 145.6 cent forecast.