Bank of Ireland has reported underlying pre-tax profits of €650m for the six months to the end of September, a drop of 32% from a year earlier.
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Chief executive Brian Goggin told RTE radio that the bank was a 'strong, sound and successful' business and did not see the need to raise additional capital at the moment. He said only €13 billion, or less than 10% of its total loan portfolio, linked to property development, was causing the bank problems.
The bank later said that the value of land which it lent developers money to buy could fall by up to 60% over the coming years.
The bank said it had increased its core Tier 1 capital ratio - a key measure of financial strength - to 6.3%. It said it planned to strengthen its capital base using a range of options, including the sale of non-core assets.
Underlying earnings per share were down 31% to 55 cent and the bank has decided not to pay a dividend this year. It said it would not resume paying dividends until 'more favourable' conditions returned.
A breakdown showed that profits in BoI's retail business in the Republic dropped 25% to to €286m, while Bank of Ireland Life profits plunged from €72m to €3m, badly hit by stock market turbulence which affected the value of its investments. Capital markets profits fell 8% to €283m and UK profits dropped 38% to €148m.
BoI took a charge of €267m for losses on bad loans, an increase of €188m from the same period last year. This represented 0.38% of average loans. It said this reflected the impact of the severe economic downturn, particularly on the property sector. The bank said it expected the charge to be at the lower end of a 0.6% to 0.75% range for the full year.
Its capital markets division also took a €40m hit from the collapse of US bank Washington Mutual.
The bank said it expected the second six months of its financial year to be 'marginally better than break even', though there was 'a degree of uncertainty' to this outcome.
BoI's results gave a breakdown of its loan book, showing that €63.4 billion - or 44% - was linked to residential mortgages, while €36.4 billion was to business. €38 billion was linked to property and construction.
Shares in Bank of Ireland closed down 11 cent at €1.21 in Dublin.
Meanwhile, the Government has ruled out the idea of the re-capitalising the country's banks. In the Dáil this morning, the Tánaiste Mary Coughlan said it was not the intention to make such a move at the moment. She said it was not an appropriate mechanism, though she added that the matter was under constant review.
The Tánaiste was responding to a question from Fine Gael's Richard Bruton, who asked whether the Government's 'wait and see' strategy on the banks was damaging the economy.
