Bloomberg News

Bank of Ireland Full-Year Net Gains 32% on Home Loans

May 31, 2006

Bank of Ireland Plc, the biggest Irish lender and fund manager, posted a 32 percent jump in fiscal full- year profit as the fastest-growing economy among the 12 nations sharing the euro fueled home loans, savings and investment.

Net income rose to 1.29 billion euros ($1.66 billion) in the 12 months ended March 31 from 980 million euros a year earlier, the Dublin-based bank said today in a Regulatory News Service statement. Excluding exceptional gains from both periods, earnings rose 16 percent to 1.18 euros a share, the bank said.

Bank of Ireland has sold units and hired business bankers to revive U.K. earnings, while contract losses at its fund management unit have slowed. That means earnings are starting to reflect demand in Ireland, where rising employment and immigration are underpinning sales of home loans, savings and investments, wrote Sebastian Orsi and John Bowe at Merrion Stockbrokers, who recommend the stock.

``The drags on Bank of Ireland's performance over the past several years have moderated,'' said the Merrion analysts in a report before the earnings were released. The results will be ``driven by the strength of the domestic economy,'' which accounts for about 60 percent of its earnings.

Bank of Ireland's shares have gained 6.7 percent so far this year, compared with a 2.2 percent gain by Allied Irish Banks Plc and a 3.9 percent increase in the 77-member Bloomberg Europe 500 Banks & Financial Services Index.

`Confident'

``I am confident of another year of strong performance'' in fiscal 2007, said Chief Executive Officer Brian Goggin, 54, in today's statement.

The 2006 profit figure includes a net gain of 206 million euros, mostly from the sale of its U.K. network of Bristol & West branches, while the year-earlier figure excludes a net gain of 14 million euros.

Irish consumer banking earnings rose 18 percent to 550 million euros before tax, helped by a 27 percent increase in home loans and 23 percent jump in business loans. Its domestic life and pensions unit increased pretax profit by 65 percent, boosted by stock market gains and new business sales.

Ireland's economy may expand 4.9 percent this year and 5.1 percent in 2007, outpacing growth of 2.1 percent and 1.8 percent in the dozen nations sharing the euro, the European Commission has forecast. Ireland's unemployment rate stood at 4.2 percent in March, compared with 8.1 percent in the euro region.

Cost-Saving Plan

Goggin is one year into a plan to reach cost savings of 120 million euros by 2009 through cutting jobs and farming out some administrative functions to companies such as Accenture Ltd. While the bank exceeded its 30 million-euro target for cost savings in the first year, Goggin also added more staff to its Irish branches, hired U.K. business bankers and opened corporate banking offices, incurring what he calls ``good costs.''

The bank has a ``clear line-of-sight'' on this year's target of 75 million euros, he said in the statement.

Profit from corporate banking, treasury and stock broking, rose 19 percent to 386 million euros, the bank said, as it opened new offices in Paris and Frankfurt and hired former Commerzbank AG and Barclays Plc executives. Lending rose 35 percent.

In the U.K., where Goggin has sold two units and added 100 business bankers, profit rose 5 percent to 349 million euros. U.K. earnings will post ``strong growth'' this year, it said.

BIAM, the bank's Dublin-based asset-management unit that has lost clients amid concern over performance and personnel changes, had 45.1 billion euros under management at March 31, compared with 46.9 billion euros a year earlier.

Profit from the fund division, which includes BIAM, dropped 32 percent to 85 million euros.

To contact the reporter on this story: Brian O'Neill in Dublin at bjoneill@bloomberg.net.

To contact the editor responsible for this story: Katherine Snyder at ksnyder@bloomberg.net Frank Connelly at fconnelly@bloomberg.net


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