CHALLENGES AHEAD BUT BOUCHER IS CONFIDENT BANK ON THE RIGHT ROAD - ''A lot done, more to do'' might be the best way to sum up Bank of Ireland’s full-year results for 2012, published yesterday writes the Irish Times in an analysis piece today. That was an election slogan employed successfully by Fianna Fáil in the 2002 general election, although it subsequently came back to bite it when the economy collapsed five years ago. Bank of Ireland chief executive Richie Boucher will be hoping to avoid the same fate. The sentiment might seem counter-intuitive given that the bank’s pre-tax loss ballooned out to €2.16 billion from €190 million in 2011. But the inflated figure was due to losses on asset sales, redundancy charges and buying back subordinated bonds. None of these took analysts by surprise. There were positives to be taken from the results. The increase in mortgage arrears appears to have slowed significantly. Boucher was keen to stress yesterday that the bank is on top of the issue and that it has no plans for blanket debt forgiveness in spite of the clamour from certain quarters. It might yet end up on a collision course with the Central Bank and/or the Department of Finance on that issue, but for now Boucher is holding tough on what is a key issue for the bank. The net interest margin target of 2% by 2014 has been abandoned - it’s not feasible without an ECB interest rate increase. However, the bank has managed to lower the rate paid for deposits while increasing the inflow. Last year’s results at least showed a significant improvement, with an average 1.34% margin in the second half of 2012. In addition, the “welcome expiry” of the Government’s bank guarantee will have a “materially positive impact” on the bank’s income.
SPREAD OF 'CAN PAY, WON'T PAY' - Leading academic Gregory Connor has put the cat among the pigeons. He has estimated that more than a third of mortgage holders who are in arrears are deliberately not paying. The Irish Independent says that this works out at close to 40,000 residential and buy-to-let mortgage holders who can meet their payments but are choosing not to pay. These people are either diverting the little money they have to pay other debts, with some actually spending the cash that should paying off the mortgage on consumption. Professor Connor is a distinguished academic. He is professor of finance at NUI Maynooth, but has previously held leading academic positions at the prestigious London School of Economics and the University of California at Berkeley. He bases his calculations on Central Bank arrears figures and US research. If his figures are anywhere near correct, they will present a considerable problem for the new Insolvency Service, which is the brain-child of Justice Minister Alan Shatter.
75% OF HOTELIERS CONCERNED ABOUT FUTURE BUT HALF REPORT TRADE PICK-UP- Almost three-quarters of the country’s hoteliers are concerned about the future of their business, but more than half are reporting a pick-up in trade for this year, according to a survey by the Irish Hotels Federation (IHF). Some 53% are seeing an increase in business levels compared to this time last year, while 29% of hoteliers report a decrease and 18% report no change, writes the Irish Examiner. Key city destinations such as Dublin, Cork, and Galway are benefiting from event and business-related tourism. Growth is also evident in the east and midlands regions, the south-east, and parts of the west coast. However, occupancy levels continue to lag in the Shannon region and the south-west. Overall confidence levels are up on last year, with 51% of respondents indicating a positive outlook for trading conditions over the next 12 months. However, 14% had a negative outlook while 35% stayed neutral on the issue. Details of the survey were revealed yesterday at the opening of the annual IHF conference, held in the Malton Hotel, Killarney, Co Kerry. The Government’s decision to reduce tourism Vat to 9% has provided a vital stimulus for hotels and guesthouses, with 90% of hoteliers saying the measure had boosted their business. As a result of this, 42% of respondents say they are likely to take on additional staff over the next 12 months.
ALWALEED CHALLENGES FORBES OVER HIS BILLIONS - One of the world’s richest men is in dispute with Forbes, the publisher of an annual list of the world’s biggest billionaires, over exactly how rich he is, writes the Financial Times. Prince Alwaleed bin Talal, the Saudi investor whose interests range from the Hotel George V in Paris to a stake in Twitter, announced on Monday that he had “severed ties” with the Forbes billionaires list, accusing it of a “flawed” valuation method that displayed a bias against middle eastern investors. “Prince Alwaleed has issued a press release in response to fact-checking questions from Forbes,” the publisher countered: “Forbes has been investigating the prince’s finances for several years, and will detail its findings in a feature story in the magazine, which will be released online [on Tuesday].” Forbes, owned by Steve Forbes, ranks the prince as the world’s 26th richest individual, estimating in its 2013 list that his net worth had risen $2 billion in the past year to $20 billion. The statement from Kingdom Holding Company, the diversified investment group in which the prince holds a 95% stake, made no mention of the prince’s own estimate of his riches, but a spokesperson for Forbes said he had estimated his wealth at $29.6 billion. That would put him just inside Forbes’ top 10, above Bernard Arnault of LVMH and the heirs to Walmart founder Sam Walton.