BANK OF IRELAND WARNS OF LOWER FULL YEAR OPERATING PROFITS - Bank of Ireland says its underlying operating profit, before impairment charges, for the year to December 2010 will be about 35-40% lower than the €1.5 billion reported in 2009. In an interim management statement, the bank says the reduction is mainly due to lower operating income and the higher cost of the Government guarantees. The bank said that while economic conditions remain challenging, it still believes that impairment charges on loans peaked in 2009 and the overall charge will progressively reduce over the next few years.
Oliver Gilvarry, from Dolmen Stockbrokers, says that the Bank of Ireland statement has some positives and negatives. He says the Irish mortgage book is showing some signs of stabilisation, but says the forthcoming austerity measures in next month's Budget will impact as will unemployment levels. One positive for Bank of Ireland is how its UK operations are faring with losses there less than expected. He adds that the UK operating is providing good support for the group.
Mr Gilvarry says that the bank is still finding its funding difficult and outflows from its capital market division continues. But its Irish retail business is stable, while its UK retail is better than expected. The higher cost of the extended Government guarantee is also hitting the bank. 'Bank of Ireland is moving in the right direction, but there is still a lot ot be done,' the stockbroker stated.
***
MORNING BRIEFS - A number of EU governments have issued a joint statement seeking to calm bond markets and avoid the Irish sovereign debt crisis spreading to other euro zone countries. The debt crisis here has been a focus of talks between the biggest EU economies meeting at the G20 summit in the South Korean capital Seoul. The statement says that any future pain to be suffered by bond holders under a German proposal from 2013 does not apply to existing outstanding debt.
*** On the currency markets, the euro is worth $1.3999 and 84.75 pence sterling.
