Bank of Ireland reported Monday a “significant” improvement in its full-year results for 2013, with pre-tax losses falling from €1.5bn in 2012 to €569m in 2013, as income rose while bad debt charges dropped to €1.66bn.
BoI said it operating profit, before impairment charges, was just over €1bn, compared with €224m in 2012 while eight out of ten of its "challenged" Irish mortgages with agreed restructuring solutions are meeting repayments. The level of defaulted loans has fallen by €1.2bn, or by 6% since June 2013 and agreements have been reached with 90% of problem SME borrowers.
Richie Boucher, Group CEO commented - - "2013 was a year of further substantial progress for Bank of Ireland. Our underlying financial performance improved by almost €1bn and we achieved our 2% net interest margin target. Taxpayers’ support for and investment in Bank of Ireland has been rewarded and repaid. We are profitable and generating capital in 2014.
"We are progressing to a further stage in the Group’s development and remain focussed on a clear set of priorities. Building on our strong franchises, we are very well positioned to pursue new business opportunities, which are increasing as the economic environment continues to improve. We are confident in the Group’s prospects and in our ability to deliver sustainable returns for our shareholders."
Results detail[ pdf]
Bank of Ireland In line, but strong margin momentum: Eamonn Hughes of Goodbody commented - - "Bank of Ireland has reported an FY13 net loss of €490m versus our €870m net loss estimate (lost €455m at H1 stage). Pre-provision profit was €1,065m versus our €1,054m expectation with the main beat on provisions (€1.66bn vs €1.9bn). Net interest income in the period pre-ELG was €2,133m which compared with our estimate of €2,119m. ELG costs in the period were €129m vs our €140m estimate. The margin was 59bps higher yoy at 1.84% versus our estimate of 1.84% (BOI recorded a 1.65% margin in H113 and an implied 2.03% in H2). Non-interest income was €642m compared to the €635m expected and €522m in FY12. Operating costs were 3% lower at €1,581m (€1,560m anticipated). This drove an operating surplus of €1,065m compared to our €1,054m expectation. The FY13 bad debt charge was €1,665m versus €1,906m forecast (it is unclear what BOI took for the CB BSA).
Defaulted loans at the end of December were €17.125bn (18.5% of advances), compared to €18.3bn in June 2013 and €17.7bn in December 2012. Drilling down, defaulted Irish mortgages were €3.796bn (14.2% of loans) in December, compared with €3.858bn (14.2%) in June 2013. Net loans were €85bn at year end, in line with expectations. On funding, the Loan to Deposit ratio was 114% (121% last June and 123% the prior December). Deposits were €74bn versus our €73bn expectation and €75bn last December. Wholesale funding was €27bn in December from €31bn in June and monetary authority drawings were down again to just €8bn (€9bn last June and €15bn in the prior December). The Core Tier 1 ratio was 12.2% (13.8% last December) compared with our 12.6% expectation, with the fully loaded figure including the preference shares at 9% compared with our estimated 8% level.
The margin performance, though in line for FY13, augers well for a potential uplift for our estimates in 2014 (2.02% FY14f and recorded 2.03% in H213). The fully loaded capital ratio is better than forecast. A very good set of results, likely to maintain momentum in the story."
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