SOLID TRADING UPDATE FROM BANK OF IRELAND SHOWS IT IS HEADING IN THE RIGHT DIRECTION - Bank of Ireland has said the pace at which customers are falling behind on homeloan payments and ending up in arrears is slowing. In an interim management statement this morning, the bank said that 86% of those customers whose mortgages have been restructured to facilitate lower levels of repayment are meeting the revised terms. Bank of Ireland also said that its net interest margin is rising. Net interest margin is the profit Bank of Ireland makes based on the gap between what it costs the bank to source money through deposits and other sources and the cost to customers of borrowing from the bank. The statement from Bank of Ireland notes that it has "reduced the cost of deposits and other funding and improved charge rates on loan assets where commercially appropriate and possible". It said it has continued to reduce its pay rates on customer deposits in the Irish domestic market and deposit volumes have remained resilient.
Barry Dixon, head of research at Davy, says that the interim management statement from Bank of Ireland is a ''fairly solid'' trading update and shows that things at the bank are going in the right direction. He notes that the bank's cost base is falling, while its margins are improving. Mr Dixon says the bank has acknowledged that it is ready and prepared for the expiry of the Government Guarantee scheme, which continues to cost it a lot of money.
SANDY SET TO BENEFIT CRH'S US OPERATIONS NEXT YEAR - In its interim management statement, CRH has said that its third quarter trading performance was roughly in line with last year. It did better in the US and worse in Europe. Revenue was 1% ahead of last year's third quarter. For the first nine months of the year, it said its revenues were 4% ahead of the €13.5 billion it generated last year. The building materials company said that the recent major storm activity in the US is likely to result in significant reconstruction work that should benefit 2013. But it added that the storm has caused significant disruption to its Materials operations in the region over the past two weeks.
Barry Dixon points out that CRH is one of the biggest highway construction companies in the US and any weather disruption there will hit its operations on a short term basis. But he says that the damage caused by Sandy will benefit CRH in the coming months as people start to repair their houses and roads. Europe continues to be a disappointment for the company, Mr Dixon adds, with its materials and cement businesses being hit by the construction slowdown. He says this is especially evident in Poland, where a number of contracts have come to an end after the European Championships soccer building boom of earlier this year. Holland is also proving weak for the company, while peripheral countries like Spain are also suffering, the stockbroker adds.
MORNING BRIEFS - 7,500 members of the Glanbia co-op will vote today on proposals to split the stock market listed Glanbia PLC in which the co-op is the most significant individual shareholder in two. They are voting on whether to split out the dairy processing part of the company which the co-op would then control from the nutritionals business. This produces a variety of products including whey protein for use in sports supplements, which is seen as a very strong growth business. If the vote goes through the co-op will offload 3% of its stake in Glanbia PLC and will then have two further votes on whether to sell another 10% of its shares. Currently that 54% co-op stake in Glanbia is worth €1.2 billion. The proceeds of selling off part of it would be used primarily to fund the new dairy business that will construct a processing plant in Kilkenny. The results of the vote will be known by midday tomorrow.
*** Mobile communications company Vodafone Group has reported a six-month loss as it booked a big charge on its Spanish and Italian operations. For the six months to the end of September, Vodafone made a loss of £1.98 billion sterling, compared to a net profit of £6.68 billion a year earlier.