Bank of Ireland has reported pre-tax profits of €1.091 billion for the six months to the end of September, up 24% from €879m the same time last year. The bank said the 'strong' group performance was delivered in an increasingly challenging environment.
Bank of Ireland said it was reducing its guidance for full-year growth, blaming turmoil in global financial markets and a cooling Irish economy. Its shares had tumbled over 8% this afternoon.
'Against this less favourable global economic backdrop, and the continuing volatility in financial markets, we are guiding high single digit underlying EPS growth for the year to 31 March 2008,' the lender said.
After stripping out profits from the sale of Davy Stockbrokers and other technical matters, the bank's underlying pre-tax profits came to €951m for the six months, up 12% from €852m the same time last year.
Basic earnings per share rose to 95.8 cent for the six month period, up 26% from 75.9 cent. In terms of bad loans, the bank said it took a charge of €79m, which was up from €48m the same time last year.
Pre-tax profits at the bank's Irish retail division rose by 12% to €381m, while its Life division saw profits up by 7% to €72m. BoI said the impact of rising interest rates in the past 18 months and poorer consumer and business sentiment has had a moderating impact on lending and deposit growth.
Growth in its mortgage book slowed to 16% while its business banking loan book grew by 22%.
The lender said the recent very high rate of Irish economic growth is moderating, mainly reflecting the predicted housing market correction.
'This slowing level of economic growth, which still remains well above the euro zone average, is expected to prevail into next year and will likely result in a lower growth in demand in the second half of our financial year to March 2008,' a statement from the bank said.
On the recent turmoil in financial markets arising from the US sub-prime crisis, Bank of Ireland said the bank has managed its funding effectively through this period of volatility.
'Asset quality remains excellent, and the negative impact of our profit of the higher funding environment is modest in this half-year reporting period,' the statement continued.
'Funding costs, while improved somewhat from their extreme positions in early August, remain at significantly higher levels and will likely negatively impact our rate of profit growth in the second half of our financial year,' it said.
Meanwhile, Bank of Ireland's CEO Brian Goggin said that the Law Society has a lot of explaining to do in relation to its regulation of solicitors.
Mr Goggin said he would not comment on specific cases, but his remarks follow the freezing of two legal practices.
Bank of Ireland shares have fallen by about 40% since the start of the year. It shares closed down 57 cent to €9.83 in Dublin this evening - a fall of 5.5%.
