Bank of Ireland today lifted its net interest income guidance for the second time in three months.
It said it now expects it to be 5% higher in the second half of the year than the first due to higher rates and ongoing business momentum.
The country's biggest lender had previously guided that net interest income from July to December would rise marginally compared to the previous six months, when it jumped by 68% year on year helped by a string of European Central Bank rate hikes.
Having raised its key interest rate to a record high of 4%, the ECB is expected to keep it unchanged at a meeting later today.
In an interim management statement for the third quarter of 2023, Bank of Ireland said it was keeping its guidance for costs and business income unchanged, with the latter expected to be broadly in line with the first half.
It also provisionally estimated that its share of a levy lenders must pay to the state will rise to €90m next year from €25m this year after a recent increase announced by Government.
Analysts at Davy and Goodbody Stockbrokers said a strong capital position meant the bank was well placed to hike shareholder distributions next year.
The bank said its fully loaded core tier 1 capital ratio - a key measure of financial strength - rose to 15.2%.
Bank of Ireland's main rival AIB, which is due to issue a trading update next week, also raised its guidance twice in quick succession earlier this year.
Ireland's two dominant lenders have benefited not only from higher rates from but from the recent exits of KBC Bank Ireland and NatWest's Ulster Bank from the Irish market.
Bank of Ireland said its lending rose by €1.3 billion on the back of a strong performance in its mortgage lending and overall loan book growth of €8.7 billion since December 2022.
It also reported deposit growth of €1.3 billion in the nine months to September and said its operating expenses were performing in line with its guidance.
Myles O'Grady, the Bank of Ireland Group CEO, said the bank had a strong business and financial performance in the period.
The CEO also said the bank was well on its 2023-2025 strategic priorities.
"While asset quality remains robust, we are mindful of the challenges facing our customers are mindful of the challenges facing our customers from the higher interest rate environment and continue to support them through a balanced approach to pricing," Mr O'Grady said.
"Our commercial actions and strategic execution are delivering continued strong organic capital generation and give us confidence in the outlook for the Group for the remainder of 2023 and beyond," he added.
Bank of Ireland shares moved higher in Dublin trade today.
