Bank of Ireland said its staff costs fell further and its loan portfolios performed as expected in the first few months of 2013, continuing the positive momentum seen in the second half of last year.
The only Irish lender to escape nationalisation after an unprecedented property crash, the bank posted a 40 percent drop in underlying profit in 2012 but a had relatively better second half amid signs of a stabilising Irish economy.
The bank said on Wednesday it had continued to rebuild its net interest margin, a measurement of the profitability of its lending that rose to 1.25 percent at the end of last year from 1.20 percent six months earlier.
The path to profitability will also be aided by the removal last month of a state guarantee on bank deposits. The guarantee cost the bank 388 million euros ($505 million) last year and the bank said it had seen no adverse impacts on deposits since the expiry.
Deposit levels remained stable at 75 billion euros, also showing no knock-on effects from the tax on savers imposed under Cyprus’ bailout last month.
The 15-percent state-owned bank, whose provisions for bad debts fell 11 percent to a still-high 1.72 billion euros last year, said it expects impairment charges to continue to reduce as the Irish economy recovers.
Unlike much of Europe, Ireland’s bailed-out economy is forecast to grow modestly for the third year in a row this year, although the export-led nature of that growth leaves Ireland dependent on shaky demand from its trading partners.
The bank’s loan to deposit ratio, cut significantly under a disposal plan that forms part of the country’s EU/IMF rescue, fell to a bailout target of 120 percent ahead of schedule, down from 123 percent at the end of December.
Its core Tier 1 solvency ratio stood 13.8 percent versus 14.4 percent at the end of last year after including the anticipated 0.6 percent regulatory deduction relating to the group’s investment in its life and pensions business.
Talks on reducing a pension deficit that has trebled to 1.2 billion euros at end-2012 are ongoing, the bank added. Source: Reuters