Bank of Ireland reports €419m profit for first half of 2022

Bank of Ireland has reported underlying profit before tax of €419m for the first six months of the year.

his marked a slight decline from the profit of €465m recorded in the first six months of 2021.

Total income for the first half of the year was also “modestly higher” than the same period last year. Business income rose 16pc compared to H1 2021, which was attributed to the ongoing recovery from the impact of the pandemic.

New lending at the bank was up 7pc compared to the same period last year. Lending in the UK retail banking division decreased by 19pc, driven by a reduction in mortgages, as well as a “strategic focus on value over volume.”

Costs at the group rose by 1pc in the first half of 2022 compared to the first half of 2021. Costs are 1pc below when the purchase of Davy and one-off investments following the planned exits of other banks are excluded, according to the bank.

Meanwhile, customer loan volumes were €74.6bn at the end of June, €1.7bn lower than volumes recorded in December 2021.

The bank’s loan book grew by €1bn on a constant currency basis, excluding planned UK deleveraging of €2bn and a non-performing loan transaction of €100m.

Bank of Ireland has a net impairment charge of €47m to cover potential loan losses, with proportion of bad loans now standing at 5.4pc.

Customer deposits were €94.1bn at the end of June 2022. This marked a €1.3bn increase from the end of last year.

The group expects modestly higher net interest income for the remainder of the year, as well as higher business income. Costs are expected to be lower than last year after absorbing inflation, and when acquisitions and one-off investment of €30m to “capture opportunities from exiting banks” are excluded.

The acquisition of stockbroker Davy has also now been completed. The bank added that if Davy was part of the group from 1 January, underlying profit of €12m would have been recorded in the first half of the year. It anticipates a similar performance in the first half of next year.

Francesca McDonagh, Bank of Ireland group CEO, said the results showed “ a strong business performance”.

“This includes reaching key milestones on our two transformative acquisitions, and material momentum in attracting new customers as the Irish banking landscape fundamentally restructures,” she said.

“Notwithstanding global uncertainty, the step change we’ve delivered in our business model makes Bank of Ireland well positioned to capitalise on the significant opportunities we face, further supported by a rising interest rate environment.”

Ms McDonagh will leave the bank in September to take up a new role at Swiss lender Credit Suisse. The Board said it now expects to appoint an interim chief executive, with an announcement to be made in due course.

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