Bank of Ireland has reported pre-tax profits of €1.6 billion for the year to the end of March, an increase of 31% on the previous year. When the effects of sell-offs and restructuring costs are stripped out, profits are up 16% to just under €1.4 billion, in line with expectations.
Underlying earnings per share grew by 16% to 118.5 cent. The bank said its restructuring programme was ahead of target, with savings of €35m, while costs grew by 3%, reducing its cost/income ratio by three points to 57%. The bank hopes to make savings of €75m this year. Chief executive Brian Goggin said he was confident of another good year, helped by better cost control and positive economic prospects.
Asked on RTE radio whether the announcement of changes in its pension scheme was ill-advised at a time when the issue was holding up the national pay talks, BoI chief executive Brian Goggin said the timing was coincidental and defended the new arrangements, which will apply to new staff only.
He said defined benefit schemes which guaranteed a pension based on final salary were 'a thing of the past'. He said many companies had shifted the risk back to staff with defined contribution schemes, but the bank had taken a more 'progressive' and 'innovative' approach.
Mr Goggin said the proposals gave certainty to employees. He said the bank would not be forced to change its plans despite opposition from its union the IBOA.
Mr Goggin said the bank's staff would benefit from the strong profits announced this morning, as it would be announcing a 6% free staff share issue to qualifying workers.
Profits at BoI's retail banking operations in the Republic rose by 18% to €550m, driven by higher volumes and higher fees. Total lending was up 23%, while mortgage growth was 27%.
BoI Life profits jumped 65% to €134m on 30% higher sales of €387m. The result was helped by the strong stock market performance, while the bank said economic and demographic factors made the outlook 'very positive'.
Profits in the wholesale banking arm grew by 19% to €386m. This division includes corporate banking, global markets, Davy Stockbrokers and IBI Corporate Finance.
Profits in the UK financial services division rose by 5% to £238m. Mortgage profits increased by 7% to £134m, with lending up 22%. Losses at Post Office Financial Services, its venture with the British Post Office, were narrowed from £32m to £22m as its customer base climbed from 100,000 to 475,000.
But profits in the asset management division dropped 32% to €85m, as funds continued to flow out of Bank of Ireland Asset Management. The bank said the performance of equity markets offset fund outflows, but the international business lost had higher margins than the new assets. BIAM now has €45.1 billion under management, down from €46.9 billion a year earlier.
Lending growth and competitive pressure led to a fall in the net interest margin from 1.94% to 1.79%.
Bank of Ireland shares closed 71 cent lower at €13.48 in Dublin this evening - a drop of 5%.
* The IBOA said the record level of profits announced by BoI showed that proposals to scrap its defined benefit pension scheme for new staff 'is unnecessary and without merit'.
