Bank Of Ireland (IRE) reported Monday a narrower pre-tax loss for its fiscal 2011 as impairment charges were more than offset by gains on voluntary liability management exercises. Net interest income and margin declined amid a low interest rate environment and intense Irish market competition.
Group Chief Executive Richie Boucher said, "2011 has been another challenging year for Bank of Ireland but also one in which we have made significant progress. We have remained focused on our key priorities of developing our relationships with our customers whilst strengthening our capital, funding our balance sheet, actively managing our credit and other risks and rigorously managing our costs."
The company said its trading environment continues to be difficult and operating income and impairment charges remain under pressure. Underlying operating profit before impairment charges on financial assets and loss on sale to the National Asset Management Agency or NAMA plunged 60 percent. NAMA is a body created by the Government of Ireland in late 2009 in response to the Irish financial crisis and the deflation of the Irish property bubble.
For the year, total operating income fell 27 percent. Total operating expenses fell 8 percent reflecting continued rigorous cost management.
The company added that domestic demand continued to fall in 2011 and a further decline is expected in 2012.
Looking ahead, Bank Of Ireland noted that trading conditions in Irish and UK markets remain challenging with economic growth now forecast to be lower than previously envisaged. The company also said that weak consumer and business confidence in the domestic economies continuing to prevail.
The company said the recovery in its net interest margins has become more difficult.
"We remain focused on all of our targets and their achievement over time. We remain on track to meet our balance sheet restructuring and cost reduction targets," Boucher added.
For fiscal 2011, loss before tax narrowed to 190 million euros from 950 million euros in the prior year.
The latest annual results were benefited by 1.79 billion euros of gains recognized in relation to the voluntary liability management exercises. This was partly offset by 565 million euros losses on divestment of certain loan portfolios. The prior year's non-core items were 2.51 billion euros.
Underlying loss before tax narrowed to 1.52 billion euros from last year's 3.46 billion euros.
The company generated a profit attributable to stockholders of 45 million euros as a tax credit offset pre-tax loss. This is in comparison to prior year's loss of 614 million euros. Loss per share was 0.7 cents versus loss of 21.5 cents a year ago.
Net interest income, before the cost of the Eligible Liabilities Guarantee or ELG scheme, declined 21 percent to 1.98 billion euros and net interest margin dropped 13 basis points to 1.33 percent.
In the U.S., Bank Of Ireland shares closed Friday's regular trading at $7.56, up $0.54 or 7.69 percent.
by RTT Staff Writer
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