Morning business news - August 1

Friday 01 August 2014 09.43
Morning business news - August 1
Morning business news - August 1

Bank of Ireland has reported a pre-tax profit of €399m for the first six months of the year - €327m if you strip out non-core items such as a gain due to changes in its defined benefit pension scheme.

The bank’s chief executive Richie Boucher said the turnaround had come thanks to an increase in revenue as well as a fall in impairment costs

“At the very top line we’ve got revenues which are up 24% to €1.5bn, a very significant contributor to that has been our lending,” he said.

“Non performing loans have continued to reduce, and even though we’ve kept prudent coverage ratios the impairment charges have come down, and that’s obviously come through to our capital.”

Mr Boucher said the bank had undertaken new lending of €4.5bn during the period – €2.5bn of which was from its Irish business.

This was about 40% higher than in the first half of last year, he said.

“If we look at our motor finance business, we have about 50% of the motor finance market, and July was an even better month than January”, he said.

Mr Boucher also said that, tracker mortgages aside, new lending had been in excess of repayments and redemptions on existing loans.

Asked about the issue of rising property prices – and how that may suit the bank’s needs as it begins to wipe out some negative equity – Mr Boucher agreed that it was helping to reduce the scale of the issue.

“The negative equity in our own book is €2.6bn, that’s down from €3bn in December,” he said.

However the majority of those customers were still meeting repayments, with their capacity to do so – and not the price of their property - the most important factor to the bank.

“So negative equity isn’t necessarily a driver of repayment capacity for customers, in fact we see a limited correlation between that,” he said.

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Ulster Bank, which reports results in sterling as its parent company is Royal Bank of Scotland, has reported a half year operating profit of £55m.

Losses due to write-downs on souring loans dropped from half a billion pounds in June of last year to £57m.

The bank says the number of customers in mortgage arrears has now fallen for 15 months in a row.

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Ibec has followed the Central Bank in revising upwards its growth forecasts for the economy.

The employers group nudged its prediction for growth in annual economic output, or GDP, from 2.9% to 3.1%.

Stronger than expected export figures and signs of a pick-up in consumer spending, for the first time since 2007, were the main reasons for its optimism.

Earlier this week the Central Bank upped its growth forecast from 2% to 2.5%.

Both the Central Bank and Ibec now predicting much stronger growth than that baked into the Department of Finance budget day predictions of 2% growth for 2014.

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Output growth from the manufacturing sector hit a 3 month high in July according to Investec's monthly purchasing managers' index.

It's the 14th consecutive month of improving conditions in the sector.

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The World Trade Organisation has failed to agree a global customs deal.

A draft of what was to be called the Trade Facilitation Agreement, which would streamline global customs procedures, was agreed at a Bali conference in December last year but was not ratified.

WTO director general Roberto Azvedo urged its 160 members to reflect on the ramifications of the deal.

The US, though, appeared to be reflecting on the ramifications for the WTO.

Its ambassador to organisation Michael Punke said the failure to agree a deal "has put this institution on very uncertain new ground."