TIDMBKIR
RNS Number : 6109W
Bank of Ireland(Governor&Co)
28 April 2016
The Governor and Company of the Bank of Ireland (the
"Group")
Interim Management Statement - Q1 2016 update
28 April 2016
Trading
The Group continues to trade in line with expectations.
The macroeconomic environments in Ireland and the UK, which are
our key markets, have remained favourable. In Ireland, the export
sector continued to expand and domestic activity increased as
improving labour market conditions and other factors positively
impact consumer spending. In the UK, where our businesses are
primarily focussed on the domestic sector, the economy expanded in
Q1, notwithstanding some uncertainty relating to the upcoming EU
referendum. Our regulatory capital ratios are substantially hedged
from currency translation impacts. However, given that sterling
weakened by 7% during the first quarter vis-a-vis our Euro
reporting currency, this has impacted reported balance sheet assets
and liabilities as well as items in the profit and loss
account.
On a constant currency basis, our net interest income has
performed in line with our expectations during the first quarter.
Customer loan asset spreads remain in line with H2 2015 levels and
we are continuing to take actions to reduce the cost of our
funding. Liquid asset volumes are higher than anticipated, due to
underlying deposit and current account volume growth. Liquid asset
spreads reflected the ongoing very low interest rate environment
and bond sales that were completed in the early part of the year,
with related additional gains benefitting non-interest income. As a
consequence of these factors, our net interest margin averaged
2.11% during the period.
Other non-interest income and fees are largely in line with the
second half of 2015, notwithstanding the backdrop of a more
volatile market environment. The Group has continued to maintain
tight control over our cost base, while making appropriate
investments in our businesses, infrastructure and people. As
anticipated, regulatory charges and levies of c.EUR50 million were
accounted for during the period.
Asset Quality
Asset quality trends have continued to improve in line with our
expectations. Our non-performing loan volumes have fallen by EUR0.9
billion since December 2015 to EUR11.1 billion at the end of March
2016, with reductions across all asset classes. Our defaulted loans
have reduced by EUR0.8 billion during the same period to EUR9.8
billion. These reductions reflect our ongoing progress with
resolution strategies that include appropriate and sustainable
support to customers who are in financial difficulty, the positive
economic environment and the ongoing recovery in collateral values.
We expect the level of non-performing loans to continue to
reduce.
Balance Sheet
Loan book dynamics continue to be broadly in line with our
expectations.
The balance sheet was impacted by the translation impact of
sterling assets and liabilities with customer loan volumes reducing
to EUR81 billion in Euro reported terms at the end of March 2016
and customer deposits to EUR79 billion, resulting in a loan to
deposit ratio of 104%. The decrease in the value of sterling
accounted for c.EUR3 billion of the movement in customer loan
volumes. New lending volumes were higher than in the same period
last year and, notwithstanding some large individual transaction
specific redemptions in our Corporate business and a broadly
similar pattern to the same period last year of redemptions across
our other businesses, our core loan books (i.e. excluding
non-performing loans, Irish tracker mortgages and legacy run-down
books) continue to grow. Wholesale funding was EUR14 billion at the
end of March 2016.
Capital
At the end of March 2016, the Group's fully loaded CET 1 ratio
was 11.2%, in line with the December 2015 position. The Group's
continuing organic capital generation was offset by an increase in
the IAS 19 accounting standard defined benefit pension deficit to
EUR0.9 billion. At March 2016, the Group's transitional CET1 and
Total Capital ratios were 13.1% and 17.7% respectively and reflect,
inter alia, the further phase in of CRD IV items since 1 January
2016.
Ends
For further information please contact:
Bank of Ireland
Andrew Keating Group Chief Financial Officer +353 (0)766 23
5141
Mark Spain Director of Group Investor Relations +353 (0)766 23
4850
Pat Farrell Head of Group Communications +353 (0)766 23 4770
Forward-Looking Statement
This document contains certain forward-looking statements within
the meaning of Section 21E of the US Securities Exchange Act of
1934 and Section 27A of the US Securities Act of 1933 with respect
to certain of the Bank of Ireland Group's (the 'Group') plans and
its current goals and expectations relating to its future financial
condition and performance, the markets in which it operates, and
its future capital requirements. These forward looking statements
often can be identified by the fact that they do not relate only to
historical or current facts. Generally, but not always, words such
as 'may,' 'could,' 'should,' 'will,' 'expect,' 'intend,' 'estimate,
' 'anticipate,' 'assume,' 'believe,' 'plan,' 'seek,' 'continue,'
'target,' 'goal', 'would,' 'can,' 'might,' or their negative
variations or similar expressions identify forward-looking
statements, but their absence does not mean that a statement is not
forward looking. Examples of forward-looking statements include
among others, statements regarding the Group's near term and longer
term future capital requirements and ratios, level of ownership by
the Irish Government, loan to deposit ratios, expected impairment
charges, the level of the Group's assets, the Group's financial
position, future income, business strategy, projected costs,
margins, future payment of dividends, the implementation of changes
in respect of certain of the Group's pension schemes, estimates of
capital expenditures, discussions with Irish, United Kingdom,
European and other regulators and plans and objectives for future
operations.
Such forward-looking statements are inherently subject to risks
and uncertainties, and hence actual results may differ materially
from those expressed or implied by such forward-looking statements.
Such risks and uncertainties include, but are not limited to, the
following:
geopolitical risks, which could potentially adversely impact the
markets in which the Group operates; concerns on sovereign debt and
financial uncertainties in the EU and the potential effects of
those uncertainties on the financial services industry and on the
Group; general and sector specific economic conditions in Ireland,
the United Kingdom and the other markets in which the Group
operates;
the ability of the Group to generate additional liquidity and
capital as required; property market conditions in Ireland and the
United Kingdom; the potential exposure of the Group to credit risk
and to various types of market risks, such as interest rate risk,
foreign exchange rate risk; the impact on lending and other
activity arising from emerging macro prudential policies; the
performance and volatility of international capital markets; the
effects of the Irish Government's stockholding in the Group
(through the Ireland Strategic Investment Fund) and possible
changes in the level of such stockholding; changes in applicable
laws, regulations and taxes in jurisdictions in which the Group
operates particularly banking regulation by the Irish and United
Kingdom Governments together with the operation of the Single
Supervisory Mechanism and the establishment of the Single
Resolution Mechanism; the impact of the continuing implementation
of significant regulatory developments such as Basel III, Capital
Requirements Directive (CRD) IV, Solvency II and the Recovery and
Resolution Directive; the exercise by regulators of powers of
regulation and oversight in Ireland and the United Kingdom; the
introduction of new government policies or the amendment of
existing policies in Ireland or the United Kingdom; the outcome of
any legal claims brought against the Group by third parties or
legal or regulatory proceedings more generally, that may have
implications for the Group; the development and implementation of
the Group's strategy, including the Group's ability to achieve net
interest margin increases and cost reductions; the inherent risk
within the Group's life assurance business involving claims, as
well as market conditions generally; potential further
contributions to the Group sponsored pension schemes if the value
of pension fund assets is not sufficient to cover potential
obligations; the Group's ability to address weaknesses or failures
in its internal processes and procedures including information
technology issues and equipment failures and other operational
risks; the Group's ability to meet customer' expectations in
mobile, social, analytics and cloud technologies which have enabled
a new breed of 'digital first' propositions, business models and
competitors; uncertainty relating to the forthcoming UK 'In / Out'
referendum; failure to establish availability of future taxable
profits, or a legislative change in quantum of deferred tax assets
currently recognised; and difficulties in recruiting and retaining
appropriate numbers and calibre of staff.
(MORE TO FOLLOW) Dow Jones Newswires
April 28, 2016 02:01 ET (06:01 GMT)
Nothing in this document should be considered to be a forecast
of future profitability or financial position and none of the
information in this document is or is intended to be a profit
forecast or profit estimate. Any forward-looking statement speaks
only as at the date it is made. The Group does not undertake to
release publicly any revision to these forward-looking statements
to reflect events, circumstances or unanticipated events occurring
after the date hereof. The reader should however, consult any
additional disclosures that the Group has made or may make in
documents filed or submitted or may file or submit to the US
Securities and Exchange Commission.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCEASLPADPKEEF
(END) Dow Jones Newswires
April 28, 2016 02:01 ET (06:01 GMT)
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