DUBLIN--Bank of Ireland PLC (IRE), which is striving to emerge
from the wreckage of the country's deep banking debt crisis, Monday
posted a smaller underlying loss in 2012, but its road back to
restoring profitability remains long.
The bank was a among a group of six stricken lenders that needed
enormous sums from Irish taxpayers to keep them from immediate
collapse when Ireland's over-inflated property market burst
disastrously over five years ago. A huge bank-rescue bill
eventually forced Ireland to strike an international bailout deal,
in late 2010.
Bank of Ireland was the only one of three Irish surviving
lenders to escape outright government control, and it believes it
will emerge from the crisis as Ireland's "pre-eminent" lender.
Compared with nationalized rivals Allied Irish Banks PLC and
Permanent TSB PLC, it shows the healthiest signs of being on the
mend. But, with Ireland's economic recovery slower than expected,
predicting when Ireland's dysfunctional banking system has firmly
turned the corner remains as difficult as ever to predict, analysts
say.
The underlying figure showed an annual loss of over 1.48 billion
euros ($1.92 billion) after a loss of about EUR1.52 billion in
2011. The figure excludes items such as gains or losses it made
from disposals under a huge restructuring.
It had a net attributable loss of EUR1.82 billion, after a
profit of EUR45 million in 2011, and a total net loss of EUR1.83
billion in the period, compared with a profit of EUR40 million a
year earlier.
Before the cost of the Irish government's bank guarantee and
allowing for certain accounting classifications, Bank of Ireland
said its net interest income was about EUR1.66 billion, down from
EUR1.88 billion a year earlier.
And it said impairment charges on loans to customers remained at
a high level of about EUR1.72 billion, though down from about
EUR1.94 billion in 2011. It expects that charge will reduce in
future periods "as the Irish economy recovers."
The Irish government owns about 15% of Bank of Ireland after
outside investors in September 2011 completed a EUR1.1 billion
purchase of Bank of Ireland stock. It also holds EUR1.8 billion in
preference shares in the lender. The government hailed the sale in
January of EUR1 billion in so-called contingent convertible, or
CoCo, notes it held in Bank of Ireland to private investors as a
sign of normality returning to Irish banks.
The government says it is confident that it will emerge from its
international bailout and resecure full access to debt markets from
2014 when the European Union and International Monetary Fund will
have disbursed the last of their emergency loans. Its creditors say
that the Irish economy has turned the corner, and that the
country's jobs crisis is past the worst, providing hope to the
country's broken lenders.
Bank of Ireland said Monday that it too detects green shoots,
saying that, with rising confidence, consumers have started buying
small ticket items and are even weighing making home purchases for
the first time in years, amid signs that home prices are
stabilizing.
But it warned that despite progress, the Irish recovery has been
"slow" and "uneven," with growth relying almost entirely on
exports, while demand remains at best flat at home.
Write to Eamon Quinn at eamon.quinn@dowjones.com
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