Bank of Ireland was founded in 1783 and the former premises of the defunct Irish Parliament at College Green, Dublin, were purchased for £40,000 in 1803.

Bank of Ireland this morning reported it lost almost €1.25bn before tax in the first half of 2010, compared with a loss of €668m in the same period last year.

The profit before impairment charges, and losses on the sale of loans to NAMA, fell down 32% to €553m.

BoI ’s loans and advances to customers, net of impairment provisions, at June 30, 2010 of €121bn reflects a marginal increase of 1% when compared to the Group’s loans and advances to customers of €119bn at 31 December 2009. On a constant currency basis the loans and advances to customers, net of impairment provisions, at June 30, 2010 was €117bn reflecting a fall of €2bn or 2% when compared to the Group’s loans and advances to customers of €119bn at December 31, 2009.

Retail Republic of Ireland reported an underlying loss before tax of €548m for the six month period ended 30 June 2010 compared to an underlying loss before tax of €518m for the six month period ended 30 June 2009. The operating profit of €204m (before impairment charges on financial assets and loss on sale to NAMA) for the six month period ended 30 June 2010 reduced by €51m or 20% compared to the operating profit of €255m (before impairment charges on financial assets) for the six month period ended 30 June 2009.

Asset quality deteriorated across all portfolios albeit the pace of deterioration eased. Loans and advances to customers classified as ‘neither past due nor impaired’ were €110bn at 30 June 2010 representing 88% of the loan book compared to €110bn at 31 December 2009 representing 90% of the loan book at that time. Loans and advances to customers that are ‘past due but not impaired’, amounted to €5.7bn or 5% at 30 June 2010 compared to €5.2bn or 4% at 31 December 2009.

Loans and advances to customers that are ‘impaired’ increased from €6.8bn at 31 December 2009 to €8.9bn at 30 June 2010, an increase of 31%.

Richie Boucher, Group Chief Executive said:“We are confident that the steps that we have taken in the first half of 2010 to strengthen the Group will enable us to successfully meet the many challenges ahead and position us well to capitalise on the opportunities that arise through a recovery in the economic conditions in our key operating markets in Ireland and the UK.”

Bank of Ireland (Buy, Closing Price €0.845); Results look fine; Goodbody's Eamonn Hughes commented  - -  "BoI has reported PTP of €116m for H1, which incorporates non-core items of €1,362m. Underlying pretax losses were -€1,246m which compares to our -€1.1bn estimate (range from -€1.1bn to -€1.5bn). Adjusted EPS was -51.8 cent. Income was 4% behind our expectations, costs were c9% higher and the credit charge was in line. The net profit for the period was €143m. Net interest income was €1.11bn (€1.25bn anticipated). Loans were flat from December and deposits -5% on underlying basis. The net interest margin was 1.41%, down 29bps yoy and compared to 1.59% for the 9 months to December last year and our 1.4% estimate, though including the ELG cost, the stated figure is closer to 1.35%. Non interest income looks better than expectations.

The bad debt charge was €1,359m, which if combined with €466m of negative income marks on its NAMA transfers to date, grosses to €1.825bn (which compares to our €1.8bn estimate). The main drivers on the non-core figure related to liability gains of €699m and a pension deficit adjustment of €676m. Capital, Provisions & Funding: On the capital front, the Tier 1 ratio was 9.9% (9.8% in December) and the core equity ratio was 8.2% (5.3% in December and our expectations of 8%+). RWAs were €93bn vs €98bn in December. On the asset quality front, impaired loans were €15.8bn overall (€8.86bn on non-NAMA book and €6.95bn for NAMA loans), which compares to €13.35bn in December (€6.79bn for non-NAMA book and €6.56bn for NAMA). Provisions were €6.64bn in June (€3.725bn on non-NAMA and €2.9bn on NAMA loans), implying 42% coverage, compared to 43% coverage in December (€5.8bn in total, with €3.0bn on non-NAMA and €2.8bn for NAMA assets).

On funding, wholesale funding was €58bn vs €61bn in December, with term funding 41% of wholesale funding, up from 32% last December. Total deposits were €84bn vs €85bn in December (though down 5% in cc) and the loan to deposit ratio was flat at 152%. Qualifying liquid assets were €41bn in June. Outlook Statement/Valuation: In the outlook section, BoI indicates that that wholesale market remain difficult, which is no surprise and has margin consequences. First off, we will more than likely raise our costs in our estimates. On our estimates, BOI is trading on 0.75x our prospective TNAV of €1.17, a figure reflecting the targeted capital in the bank at year end, recognising the NAV is unlikely to grow out to FY12. Our fair value multiple is 1x, with the European sector trading on 1.2x currently. Our TNAV estimate adds back the AFS, cash flow & pension deficits, which totalled €2.3bn in June (pension deficit was €1.26bn while AFS & cash flow hedge was €1.04bn in deficit). The TNAV figure was an estimated €1.46 per share at end June (on a gross basis, with the deficits measuring an estimated €0.44/share)."