Bank of Ireland proposes 250pc rise in shareholder distributions following ‘strong performance’

Bank of Ireland is more than tripling cash distributions to shareholders as it unveils plans for increased dividends and a new share buyback following a “strong financial performance”.

n its annual results published today, Bank of Ireland reported a underlying profit before tax of €1.198bn for 2022. 

Excluding an impairment charge, underlying profits rose 15pc on 2021.

Total income rose 11pc across the year, while net interest income rose 12pc compared to the year prior.

This growth was attributed to the higher central bank rates across the year, as well as larger customer balances and business momentum.

The lender opened 240,000 new accounts across the year as KBC and Ulster Bank prepared to exit the Irish market. This reflected a 100pc growth compared to 2021,with an €11bn increase in deposit balances.

Assets under management at the lender rose to €39bn, including €18.4bn as a result of the Davy acquisition.

Following this performance, the bank is recommending €350 of dividends and buybacks, a sharp increase from the €104m proposed last year. 

This includes €225m in ordinary dividends, equivalent to a 25pc pay-out ratio of statutory profit, as well as a €125 share buyback.

New financial targets set to be introduced by the bank for the period from 2023-2025 will see the dividend payout ratio rise to 40pc, according to the bank.

Bank of Ireland also completed the acquisition of KBC Ireland assets over the year in a deal worth €7.8bn.

The bank reported that costs were 6pc higher in 2022 due to the inclusion of Davy from June 1 and the investment in the on-boarding of new customers.

Customer loan volumes decreased by €4.4bn to €72bn at the end of 2022.

On a constant currency basis and excluding planned UK deleveraging of €3.9bn and a non-performing loan transaction of €900m, the loan book grew by €1.6bn in 2022.

New lending of €15.6bn was €1.5bn higher than 2021, the bank reported.

Customer deposits at the bank were €99bn, €6bn than December 2021, driven by higher household and SME volumes due to new customers.

“In 2022 we made two stand out acquisitions and grew our customer base by over 11pc. We met or exceeded key financial targets, and ended the year with a very strong capital position,” chief executive Myles Grady said.

“This allows us to propose a c.250pc increase in distributions. We also returned to full private ownership, a unique position in Ireland amongst domestic retail peers.”

The lender now expects net interest income to grow more than 12pc this year compared to the final quarter of 2022, reaching €3bn due to interest rate expectations, the impact of the KBC acquisition and business momentum.