BANKING: Bank of Ireland group chief executive, Mr Michael Soden, has pledged to drastically cut costs across the bank this year although he does not envisage further job losses.
"There are other ways to contain costs in areas such as discretionary spending and the distribution channels. We don't see ourselves taking out more staff," he said yesterday.
The bank has reported a 3.4 per cent increase in profits to €1.12 billion in the 12 months to the end of March. The results are broadly in line with market expectations.
The performance was largely driven by a strong contribution from the bank's retail banking business in Ireland and its treasury operations.
Difficult conditions in the world stock markets were blamed for lower profits at Bank of Ireland's life assurance and wealth management businesses while its UK financial services unit also had a weaker outturn.
On the back of this performance shareholders will be paid a dividend of 33 cents per share, a 14 per cent increase on last year. Earnings per share rose by 11 per cent to 93.4 cents.
The headline profit figure excludes the €37 million cost of the bank's transformation programme that aimed to cut costs, largely through voluntary severance and branch closures throughout the Republic. By the end of March 2002, some 600 staff had left the group.
A further 900 will depart next year.
Despite this cost containment exercise, the bank's overall costs rose by 14 per cent last year prompting Mr Soden to state this will not happen again this year.
Mr Soden said much of this was because of higher staff costs due to higher pay and benefits.
Other factors that increased the wage bill were special payments and bonuses awarded following the changeover to the euro.
He said the bank is currently discussing its view on any new national wage agreement. Bank of Ireland executive, Mr Des Crowley, added that the bank viewed the last partnership deal as being "a little bit expensive".
Its retail operations in Ireland contributed €321 million to group profits, an increase of 11 per cent. Bank of Ireland Life profits were down 7 per cent at €122 million, the UK operations, which include Northern Ireland, reported a 2 percent decline in profits to €318 million.
Wholesale financial services, which includes the bank's treasury operations showed the biggest increase with profits up 25 per cent to €355 million. Mr Soden said this included a one-off exceptional contribution of around €50 million that would not be repeated this year. Asset and wealth management profits were down by 5 per cent at €126 million.
Commenting on the current year, Mr Soden said business had gotten off to a strong start and he was very upbeat about the prospects about the growth potential of the Irish economy.
He believes the Irish economy will grow by around 3 per cent this year and expand by 5 per cent in 2003 suggesting this will continue to boost the bank's profits.
Bank of Ireland will also continue to look for new acquisitions in the UK market.
