Bank of Ireland stocks slip despite generous payout
The lender’s shares lose ground after a weaker-than-expected outlook overshadows more than tripling of shareholder returns
26 February 2024 - 14:03
byPadraic Halpin
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Signage is seen outside a Bank of Ireland branch in Galway, Ireland. Picture: REUTERS/CLODAGH KILCOYNE
Dublin — Bank of Ireland’s shares fell 10% on Monday after a weaker-than-expected outlook from the country’s biggest lender took the shine off a more than tripling of shareholder returns as a result of surging full-year profits.
Ireland’s highly concentrated banking sector makes more of its profit through interest revenue than European peers, with lenders enjoying a surge in net interest income since the European Central Bank (ECB) started increasing rates 18 months ago.
Bank of Ireland’s pretax profit rose 92% to €1.9bn in 2023. The company plans to return €1.15bn to shareholders, €634m of which will be in dividends, with the rest through share buybacks.
However, that was also lower than the €2.1bn pretax profit expected by analysts polled by LSEG and the bank’s shares were 10.4% lower at €8.15 in early trade.
Bank of Ireland said it expected its 2024 net interest income to be 5%-6% lower than the fourth quarter annualised run rate as the ECB lowers rates during 2024. The ECB’s key rate is forecast by Bank of Ireland to fall to 2.75% by the end of the year from a record high of 4%.
Analysts at stockbroking firms Goodbody and Davy said the guidance implied that Bank of Ireland’s 2024 profit would be below market expectations. Davy said its forecast for the bank’s 2024 underlying pretax profit was likely to be lowered by 9% to about €1.85bn as a result.
Bank of Ireland’s net interest income jumped 48% year on year to €3.7bn in 2023.
The bank said it also expected its strong capital position to continue in 2024, with distributions again comprising dividends and share buybacks.
Its net credit impairment charge doubled to €403m, which the bank said included adjustments to address potential risks, primarily in commercial real estate.
Finance chief Mark Spain said there was no evidence of material stress across the bank’s loan books and that the charge related to commercial real estate “is us getting ahead of any potential future problems”.
The bank’s shares have fallen 17% in the past 12 months, including Monday’s losses.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Bank of Ireland stocks slip despite generous payout
The lender’s shares lose ground after a weaker-than-expected outlook overshadows more than tripling of shareholder returns
Dublin — Bank of Ireland’s shares fell 10% on Monday after a weaker-than-expected outlook from the country’s biggest lender took the shine off a more than tripling of shareholder returns as a result of surging full-year profits.
Ireland’s highly concentrated banking sector makes more of its profit through interest revenue than European peers, with lenders enjoying a surge in net interest income since the European Central Bank (ECB) started increasing rates 18 months ago.
Bank of Ireland’s pretax profit rose 92% to €1.9bn in 2023. The company plans to return €1.15bn to shareholders, €634m of which will be in dividends, with the rest through share buybacks.
However, that was also lower than the €2.1bn pretax profit expected by analysts polled by LSEG and the bank’s shares were 10.4% lower at €8.15 in early trade.
Bank of Ireland said it expected its 2024 net interest income to be 5%-6% lower than the fourth quarter annualised run rate as the ECB lowers rates during 2024. The ECB’s key rate is forecast by Bank of Ireland to fall to 2.75% by the end of the year from a record high of 4%.
Analysts at stockbroking firms Goodbody and Davy said the guidance implied that Bank of Ireland’s 2024 profit would be below market expectations. Davy said its forecast for the bank’s 2024 underlying pretax profit was likely to be lowered by 9% to about €1.85bn as a result.
Bank of Ireland’s net interest income jumped 48% year on year to €3.7bn in 2023.
The bank said it also expected its strong capital position to continue in 2024, with distributions again comprising dividends and share buybacks.
Its net credit impairment charge doubled to €403m, which the bank said included adjustments to address potential risks, primarily in commercial real estate.
Finance chief Mark Spain said there was no evidence of material stress across the bank’s loan books and that the charge related to commercial real estate “is us getting ahead of any potential future problems”.
The bank’s shares have fallen 17% in the past 12 months, including Monday’s losses.
Reuters
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