Bank of Ireland has today reported a better than expected 5% rise in first half pre-tax profit and lifted its net interest income guidance for 2024 for the second time this year.
The bank said its first half profit rose 5% to €1.1 billion, ahead of the €968m forecast in a company poll of analysts, mainly due to lower regulatory fees and levies and a “materially” lower than expected impairment charge.
The country’s biggest lender said it expects net interest income of €3.55 billion for 2024, at the higher end of its previously upgraded guidance from May and that it also expects to generate more capital that previously flagged.
Ireland’s highly concentrated sector of mainly retail-focussed lenders make more of their profit through interest revenue than European peers.
Bank of Ireland said it now expects its return on tangible equity for the year to be ahead of the 2023 level of 17.3%, compared to previous guidance that it would be above 15%.
It also said it will start an interim dividend for the first time since the Irish banking crash of 2008, and will return €352m to shareholders, the equivalent of 40% of first half profit after tax.
Bank of Ireland said its net interest income saw growth of 2% in the six month period on a like-for-like basis, on the back of higher interest rates, growth in lending income – particularly in Ireland -higher funding costs and continued strong commercial pricing discipline.
It said its net interest income is now expected to be about €3.55 billion, at the higher end of the bank’s earlier guidance.
Bank of Ireland said its loan book increased by €1.8 billion during the first half of the year, while group deposits increased by €0.6 billion to €100.8 billion.
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The lender said its operating expenses have progressed in-line with guidance, adding that it continues to maintain tight control over its cost base while absorbing inflation and continuing to invest in strategic growth and simplification opportunities.
It also said it expect levies and regulatory charges to be €125m to €130 million in 2024, lower than its previous guidance of €160m to €165m.
Bank of Ireland reported a net credit impairment charge of €50m, which it said was materially better than expectations.
Myles O’Grady, the Bank of Ireland Group CEO, said that the bank is now half-way through its three-year strategy, adding that it is meeting or beating its targets and investing for the future.
“This year we’ve announced a range of improvements to our branches, ATMs, contact centre services and fraud support for our customers. The launch of innovative green mortgages and the expansion of agri-business green lending, and an increased funding commitment for housing development were important developments in H1,” the CEO said.
“Our differentiated business model operates in structurally attractive and growing markets and is highly capital generative. These factors, complemented by our single-minded focus on delivery, make us very well positioned to continue to deliver attractive returns for our shareholders through the current strategic cycle and beyond,” the added.
Shares in the bank moved higher in Dublin trade today.
