Bank of Ireland has upgraded its full-year net interest income guidance slightly and now sees the result coming in above the €3.3 billion it had previously forecast.
Net interest income fell 7 per cent in the first nine months of the year, but was “modestly ahead” of the bank’s expectations, the bank said in a trading update on Wednesday.
The result was driven by a lower average rate on billions of euros of excess deposits stored with the European Central Bank (ECB) and it exiting some loan portfolios, partially offset by volume growth in both deposits and core loan portfolios and financial derivatives smoothening out its exposure to ECB rate movements.
Total business income rose 5 per cent, helped as assets under management at its Davy and New Ireland life assurance units rose by €3.5 billion over the first nine months of the year to €58.3 billion, driving strong fee income growth.
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Operating expenses rose 3 per cent. The group continues to progress its multi-year simpler business initiatives, with the objective of maintaining costs at about €2 billion in 2026 and 2027, supported by a range of restructuring actions, it said.
[ Bank of Ireland says its UK motor finance bill could more than double to €403mOpens in new window ]
Group chief executive Myles O’Grady said in July that he plans to cut 260 jobs in the second half of this year and sees further redundancies in 2026, as the bank aims to keep running costs in check.
Bank of Ireland warned last week that it could more than double the provision set aside to deal with the fallout from the UK motor finance commissions scandal, now estimating it could have to pay out about £350 million (€403 million).
The UK Financial Conduct Authority (FCA) estimated earlier this month that the total cost of an industry-wide redress scheme could come to £11 billion, including £2.8 billion of implementation and operational costs.
An increase in provisions of that order would knock 0.35 percentage points off the 1.85-point increase in the bank’s common equity Tier 1 capital ratio so far this year, to 16.2 per cent. The ratio is well above its target of being over 14 per cent, and is expected to support strong dividends and share buybacks.
The bank recently completed a €590 million share buyback programme.
“Since the start of 2022, the group’s share count has reduced by 12 per cent through a series of buybacks, and – as previously announced – an interim dividend of 25 cents per share will be paid on 30th October as part of the group’s overall progressive dividend per share objective for the year,” Mr O’Grady said.
“While we remain vigilant to the evolving international backdrop, the Irish economy continues to be resilient and growing.”
