Information  X 
Enter a valid email address

Bank of Ireland trading conditions remain challenging

By BFN News | 08:52 AM | Tuesday 24 April, 2012

Bank of Ireland says trading conditions in the first quarter remained challenging. But it says exporting sectors of the Irish economy are expected to continue to enjoy growth, underpinned by the improved competitiveness of the Irish economy. It adds: "Whilst consumer confidence surveys have shown improvements in the first three months of 2012, domestic economic indicators remain weak, unemployment remains elevated, and residential property prices do not appear, as yet, to have fully stabilised. " The bank says that while Ireland has been meeting its commitments under the EU/IMF support programme, there has been some heightened concern in the markets in recent weeks about the economic performance of some other eurozone countries. The group says its operating income and net interest margin continue to be adversely affected by the cost of funding, the carry-over impact of intense deposit competition in the Irish market in the second half of 2011, Exceptional Liability Guarantee 'ELG' fees and reductions in earning assets as it de-levers the group's balance sheet. It adds: "Although the economic environment remains difficult with interest rates expected to remain lower for longer, we remain focused on our key priorities and continue to implement initiatives to further strengthen the Group's balance sheet and improve product margins, whilst proactively managing credit risks and our cost base. "Since the start of 2012, the group has begun the process of reducing deposit pricing in the intensely competitive Irish deposit market. We are also continuing to re-price our lending portfolios where appropriate, including having notified relevant customers in our UK intermediary mortgage business that the group's standard variable rate cap will increase by 150 bps during 2012. "The group's participation in the ECB's February 2012 LTRO operations to the extent of �?¬4.8bn (�?¬1.5bn of which related to the funding of a net incremental investment in Irish sovereign/government guaranteed bonds since year end) was primarily focused on increasing the term of existing Monetary Authority funding. "In line with our strategy of prudently disengaging from the ELG scheme, our UK banking subsidiary announced its withdrawal from the ELG scheme from 1 April 2012 and the total quantum of our funding covered by the ELG scheme has reduced further since the year end. "The benefits of these initiatives are expected to positively impact the group's net interest margin in the second half of 2012, offset somewhat by further reductions in Euribor/Libor rates since the year end. "Operating costs remain under strict control and the strong cost discipline implemented across the group continues to deliver cost savings as anticipated." At 8:52am: (LON:BKIR) Bank of Ireland (Gov) share price was -0p at 0.11p Story provided by