Bank of Ireland has reported a pre-tax loss of almost €1.25 billion for the first six months of this year, compared with a loss of €668m in the same period last year. The results were hit by €1.8 billion the bank has set aside to cope with potential losses from bad loans.
Losses of more than €900m were linked to loans it has transferred or plans to transfer to the National Asset Management Agency. The bank also took a hit of almost €900m on other loans.
Richie Boucher, Bank of Ireland's chief executive, told RTE radio the bank had been through its loan book and was sticking to its view that loan losses peaked in the second half of last year. Mr Boucher said total loan losses would continue to fall and would 'normalise' by 2013.
Excluding the loan loss charges, profits were down 32% to €553m. The bank, which has plans to cut 750 staff over the next two years, said it had cut costs by 3%.
The bank said it had taken steps to stabilise the group, but business conditions remained tough and funding conditions deteriorated towards the end of the six months.
The bank said it was committed to its strategy to disengage in a safe and prudent manner from the Irish Government's guarantee schemes, as market conditions allowed.
BoI said there was still uncertainty about the final discount on the loans it would transfer to NAMA, though it expected the figure for the second batch of loans to be 35%. It also stuck to its estimate of total loan losses of €4.7 billion for the three-year period to the end of March 2011.
A breakdown showed that the impairment charges on residential mortgages rose 23% from a year earlier to €132m, with the bank blaming higher unemployment and reduced incomes. Losses on loans to businesses were lower at €356m, but property and construction loan losses rose to €325m.
Bank of Ireland's retail banking business made a loss of almost €550m, while profits excluding loan losses dropped 20% to €204m.
Bank of Ireland Life returned to the black with a €30m profit, however, helped by a stronger performance in investment markets. The bank's UK losses were 25% higher than a year earlier at just over €200m. The Capital Markets division made a loss of more than €400m, compared with a profit of €125m a year earlier.
Results still disappointing, says Boucher
Mr Boucher later told reporters that, despite significant progress, the results were disappointing.
He also said the bank was committed to supporting its customers, and had increased its dedicated resources to support customers in financial difficulty. The Bank of Ireland chief also said it was continuing to review rates on all of its products.
He said that in the first six months, the bank had approved around 75% of the 10,000 mortgages applied for. The average loan to first-time buyers was €200,000.
Mr Boucher said Bank of Ireland's branch network remained extremely important to it, and there would be no significant changes in the number of branches, and it could even be opening some branches.
But he said the bank had virtually halved its Dublin office numbers from 32 two years ago, and could be operating out of just five buildings in the capital in five years' time.
Bank of Ireland shares closed 0.6% lower at 84 cent in Dublin this evening.
