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Lending increases at Bank of Ireland

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Ellie Donnelly Twitter Email

Lending has increased at Bank of Ireland in the nine months to September 30 as the economy continues to recover from Covid restrictions.

New lending is 7pc higher in the nine months to end-September versus the prior year, according to a trading update from the bank.

Bank of Ireland’s business income is “in-line with expectations,” with income increasing 8pc in the nine month period, supported by growth in its Wealth and Insurance divisions.

The bank’s net interest income – a key measure of profitability for a bank – is 2pc higher in the nine months to September this year when compared to the same period in 2020 on the back of reduced funding costs and the increased application of negative interest rates on certain deposits.

Customer loan volumes at the bank were “stable” at €76.7bn at end-September, compared to €76.6bn at end-December.

Customer deposits were €91.3bn at end-September.

The bank experienced net lending growth of €700m in Retail Ireland and Corporate in the nine month period.

“During the third quarter of 2021, we have seen continued recovery of business activity, supported by a more positive economic environment and outlook. The continued improvement in our performance in the third quarter is reflected by higher income, lower costs and an increase in capital,” Francesca McDonagh, Bank of Ireland Group CEO, said.

“Continued execution of our strategy has supported a 17pc increase in operating profit pre-impairment to end-September 2021 compared to the same period in 2019, pre-Covid-19.”

The bank said it continues to maintain tight control over the cost base. Operating expenses (excluding levies and regulatory charges) are 4pc lower in the nine months to September 30 than they were a year ago.

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Last Friday Bank of Ireland entered a binding agreement on the €5bn sale of KBC’s performing loans. It is also in the process of buying stockbrokers Davy.

Ms McDonagh said the bank is “progressing” its deals with KBC and Davy.

Completion of both of these transactions is expected next year, subject to regulatory and competition authority approvals.

“Both transactions support our business growth strategy and are financially transformative, supporting our target to deliver a ROTE [return on tangible equity] in excess of 10pc in the medium term,” Ms McDonagh added.

Earlier this month, the Competition and Consumer Protection Commission (CCPC) said it would carry out a full “Phase 2” investigation into the proposed Bank of Ireland – KBC transaction, which could take five months.

Meanwhile, the Department of Finance is progressing its sell down of the State shareholding in Bank of Ireland, with the stake now down to less than 10pc.

“This is a positive development – for Irish taxpayers, the Irish economy, and Bank of Ireland,” Ms McDonagh said.

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