While retail division profits rose by 17 per cent, asset management services dropped 10 per cent
Bank of Ireland has delivered a solid full-year performance despite the impact of weak investment markets on its life assurance and fund management businesses.
The Republic's second-biggest bank reported a 5 per cent rise in pre-tax profits to €1.17 billion in the 12 months to the end of March and has signalled a good start to the current financial year.
Bank of Ireland incurred an exceptional cost of €164 million related to the restructuring of its banking operations in Britain, which include the Bristol & West building society. When this is factored in, the bank's profits fell 7 per cent on the previous year to €1.01 billion.
Group chief executive Mr Michael Soden said the bank had delivered a very robust performance against a challenging market backdrop and that, with a "fair wind" in the equity markets, the bank could achieve very positive results this year.
"We are well positioned for growth. The five divisions cannot always be synchronised to deliver simultaneously but we have shown that, with growth in two or three of them, we can achieve impressive growth," he said.
Bank of Ireland shares gained five cents to €11.54 on the strength of the results. Shareholders will be paid a dividend of 37 cents per share, up 12 per cent on the previous year.
Bank of Ireland's retail banking business in the Republic continued to deliver handsomely for the group. The division, which has benefited from continuing strong demand for mortgages, achieved a 17 per cent increase in profits to €375 million.
The bank's wholesale financial services operations, which include its corporate and private banking business and Davy Stockbrokers, brought in profits of €389 million, a 10 per cent increase on 2002.
Its UK business, which is being overhauled, accounted for profits of €352 million, up 11 per cent on the previous year.
Progress at its life assurance and asset management businesses was hampered by the drop in equity markets and the lack of investor confidence during the period. Profits at Bank of Ireland Life fell by 29 per cent to €87 million, while its asset management services saw a 10 per cent fall in profits to €113 million.
Bank of Ireland had warned investors to expect a drop in profitability, with the bank estimating that the weak equity markets would cost the bank some €100 million in profits.
Last year, Mr Soden had pledged to continue reducing the bank's cost base and to accelerate revenues. The deterioration in the investment markets reduced revenue growth from 11 per cent to 4 per cent, while cost growth fell from 14 per cent to 5 per cent.
"We delivered this earnings performance without embracing undue risk," he said. "Credit quality in the group is of a very high standard and has shown no material deterioration, despite generally weaker conditions."
Mr Soden emphasised that the bank, which made an approach to Abbey National, was not looking for a deal of a similar scale and was not aware of any such potential opportunities.
