The Republic's second-biggest bank has delivered a 28 per cent increase in underlying pretax profit in the first half and raised its full-year growth forecast to 20 per cent.
Bank of Ireland yesterday reported pretax profit before exceptional items of €852 million in the six months to the end of September, up from €665 million a year ago. Including exceptional items, such as restructuring costs and profits from asset sales, pretax profit was up 5 per cent at €887 million.
Chief executive Brian Goggin attributed the gains to significant improvements in efficiency, a turnaround in the British financial services business and a particularly strong performance from the corporate banking division.
"It was an outstanding all-round performance," he said. "Volumes are strong across the board and recruitment of new customers [ in the UK] continues apace."
Bank of Ireland, which makes about 60 per cent of its profits in the Republic, had originally forecast earnings growth "in the high teens".
Analysts yesterday welcomed the results, which came in slightly ahead of expectations, and said it was good to see the improvements the bank had been targeting for the past few years, in particular the slowdown of margin attrition, coming through.
David Odlum, an analyst at NCB, said he was particularly impressed with the performances at the UK and corporate banking divisions, though he warned that such strong rates of growth - 33 and 76 per cent profit growth respectively, were not sustainable. Still, he was upbeat overall and said the positive tone of the results bodes well for the rest of the Irish banking sector.
Shares in Bank of Ireland rose as high as €16.30, before falling back slightly to end the day up 15 cents, almost 1 per cent, at €16.15.
On a divisional basis, the bank reported a 26 per cent increase in pretax profits at its retail banking business in the Republic, boosted by strong demand for mortgages.
However, Mr Goggin warned that rising interest rates were starting to affect affordability and that the bank, which has about 20 per cent of the Irish mortgage market, had seen a decline in the number of first-time buyers applying for mortgages.
In the wholesale business, which includes corporate banking, pretax profits were up 52 per cent, while asset management, as expected, fell by 35 per cent.
The UK business, in which the bank has recently invested heavily, was also strong, with pretax profit up 33 per cent on the prior period.
The recent sale of Davy Stockbrokers to its own management will add 40 basis points to the group's capital base, finance director John O'Donovan said.
Mr Goggin yesterday defended the bank's decision to terminate its defined benefit pension scheme and replace it with a new combination-type scheme - a move that is opposed by members of the Amicus union, who this week staged the first of two day-long strikes.
Mr Goggin said the bank would not be reversing its decision, a statement that was criticised yesterday by the IBOA finance union in the light of the strong profits reported by the group.
