BANK OF IRELAND says that trading conditions “remain challenging” but expects Irish exports to “continue to enjoy growth”, according to its latest interim management statement.
However, the bank says that despite some positive signs for Irish competitiveness and consumer confidence, “domestic economic indicators remain weak, unemployment remains elevated, and residential property prices do not appear, as yet, to have fully stabilised.”
It notes that arrears in its residential mortgage book continue to increase, but says it is engaged with customers who are in difficulty and seeking loan restructures.
“Given the continued difficult conditions in the Irish economy,” it adds, “our Irish business customers who have a high dependency on the domestic economy continue to face challenges.”
It says that customer deposits are “broadly in line” with December 2011 figures at €70 billion, and its loan to deposit ratio is down to 142 per cent (from the 144 per cent of 31 December 2011). Loans and advances to customers are down 3 per cent to €99 billion since the start of the year.
BOI says it began reducing its deposit prices early in 2012 and will continue to re-price lending portfolios “where appropriate”, such as the variable rate increase to customers in the UK.
There are also heightened concerns over the performance of other eurozone economies and the bank’s “operating income and net interest margin continue to be adversely impacted by the cost of funding”.
However, it is making anticipated cost savings and its operating costs “remain under strict control”.
BOI is holding its AGM today.
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