Bank of Ireland says it experienced strong growth in the first half of its financial year, broadly in line with market expectations of profits of €1.2 billion for the full year.
In a trading statement issued to the Irish Stock Exchange yesterday the bank indicated that, before tax, its profits for the six months to the end of September will rise by between 5 and 10 per cent. Earnings per share will also rise at a similar pace.
Profit growth was underpinned by strong trading in its retail businesses in Ireland and a solid outturn in its wholesale activities, said the bank. The group's UK financial services division also delivered good profits.
Analysts said the statement did not present any reasons for them to revise their profits forecasts for the Republic's second biggest bank. It is expected to deliver profits of €1.2 billion at the end of March 2003. Bank of Ireland shares were weaker in line with the market and closed down 35 cents at €10.
The asset management business, Bank of Ireland Asset Management, has suffered in line with weak stock markets but the bank says this will be offset to a large degree by higher business volumes.
Core net interest income, the money earned by the bank on its deposits and lending activities, is expected to increase by less than 15 per cent, with good business volumes reported in the Republic. Its other income, which includes sales of life assurance and other activities, will show mid single-digit growth.
The bank has also flagged that it will be exiting two peripheral businesses, which will result in an exception charge of €25 million. The bank refused to identify the businesses.
It has also reported good progress in managing its costs to position the bank for a leaner economic environment. Overall it stated that the economic fundamentals in the group's principal markets remain relatively healthy but admitted that forecasting was difficult against the background of continuing market volatility and economic uncertainty.
Bank of Ireland reassured the market that asset quality remained strong and had not been affected by the worsening economic climate.
It does not envisage raising its provision for bad debts and loan losses, stating that these ratios will be maintained broadly at last year's level.
The Republic continues to deliver strong growth for the bank with lending, particularly mortgage lending, still buoyant. Deposits have also held up well and are expected to show a low double-digit percentage increase.
Costs growth will be in the mid to high single-digit range, with increases under the national wage round being cited as a major element.
Loan losses as a percentage of average advances in Ireland are expected to be slightly higher than in the same period last year, but remain satisfactory, it said.
The bank's life assurance business was boosted by the Government-backed special savings incentive account scheme and it says it solvency has not been affected by adverse market conditions.
