Trading conditions still difficult - BoI

Bank of Ireland said today that trading conditions continues to be challenging while demand for new lending remains muted.

In a trading statement issued ahead of the bank's AGM, BoI said the lower interest rate environment and increased competition has put pressure on liability spreads.

It added that it saw no change to its expected impairment charges of about €6 billion in the three years to March 2011. This includes the loan impairment charge of €1.4 billion taken in the year to March 2009. However, it warned that there is a risk that the loan impairment charge could rise in the event of a further deterioration in economic conditions or prolonged low levels of activity in residential and commercial property markets.

The bank said it had raised €3 billion in term funding and has strengthened its capital position after the completion of its debt buy-back programme of euro, sterling and dollar securities.

Bank of Ireland said that it continues to engage with the National Asset Management Agency (NAMA) but added that as as details on how it will operate have not been finalised, it is unable to say what the impact on operating profit and loan impairment charge will be.

Speaking at the AGM later in the day, outgoing chairman Richard Burrows told shareholders that the expects difficult market conditions to continue.

"Bank of Ireland is facing into a difficult period ahead in view of the economic conditions in our main markets and consequently we expect lower levels of business activity," he said.

The bank's shares were down 0.4 per cent at €1.52 by 11.15 am, a fraction of their near €19 level in early 2007 at the height of Ireland's property bubble.

But Bank of Ireland outperformed rival financial groups Allied Irish Banks and Irish Life & Permanent which were down 4.1 per cent and 3.4 per cent respectively.