Wednesday, May 22, 2024

Bank of Ireland raises net interest income guidance

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The bank also expects net interest income for the year to be higher than previously expected.

Bank of Ireland had previously forecast a 5pc – 6pc decline this year due to potential interest rate cuts. It now anticipates net interest income to be 3pc – 4pc lower than last year.

The bank said it expects interest rates set by the European Central Bank, the Bank of England and the US Federal Reserve this year to be an average of 25 basis points higher than assumptions used in its full-year results.

The ECB is on course to start cutting interest rates in June.

Net interest income for the first three months of 2024 was in line with both expectations and the level recorded in the final quarter of last year, the bank said in its interim management statement.

This was attributed to lending momentum and strong commercial pricing but was partially offset by a decline in deposit volumes and a modest increase in deposit funding costs.

Net interest income, the key driver of bank profitability, soared by €1.2bn to €3.7bn in 2023.

Operating expenses were in line with expectations, with the bank expecting mid-single digit percent increase this year.

Bank of Ireland also reported a €0.7bn increase in net retail and corporate lending in Ireland in the first three months of the year compared to December 2023.

Customer loan balances also rose to €80.7bn at the end of March, up from €79.7bn at the end of December last year.

Green mortgages accounted for 47pc of new mortgage lending in the first three months of 2024.

The bank reported that it was in a strong capital position with a fully loaded core equity tier 1 (CET1) capital ratio of 14.7pc, up from 14.3pc in December, and a regulatory CET1 capital ratio of 14.7c.

Bank of Ireland said it remained on track to deliver targets outlined in its 2023 – 2025 strategic cycle.

Bank of Ireland Group chief executive Myles O’Grady said the group had a “strong first quarter, underpinned by loan book growth, higher income and robust capital generation. “

He pointed to ongoing investments, including supports for customers impacted by fraud, technology, the branch network and the introduction of a green mortgage product,

“The Group also increased its funding commitment for housing development in Ireland and expanded agri-business green lending,” he added.

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