[ad_1]
The Bank of Ireland fell into a loss in the first quarter when the Covid-19 crisis led the group to take on a € 266 million loan impairment charge and rack up an additional € 155 million hit as market volatility of stocks and bonds affected his wealth and insurance business and financial assets.
The combined impact of € 421 million resulted in the bank recording an underlying pre-tax loss of € 235 million for the quarter, it said in a trade update on Monday.
The Bank of Ireland has extended loan payment interruptions to 86,000 clients in Ireland and Great Britain since mid-March. While the lender has yet to see a substantial increase in troubled individual loans, it took on a large impairment charge in anticipation of a rise in bad debt as the economy has deteriorated sharply in recent months.
The bank warned that loan charges will increase as the year progresses, with new loans for 2020 possibly reaching between 50 percent and 70 percent of the € 16.5bn figure for 2019, and business revenue falling as much as 40 percent. result of reduced economic activity.
“We are off to a good start to the year: increasing loans, selling more than a quarter of all new mortgages in Ireland, lowering costs and with the lowest level of arrears than any Irish bank. However, right now everything is seen through the lens of Covid-19, “said CEO Francesca McDonagh.
“The economic outlook for our main markets in Ireland and the UK has deteriorated, with reduced levels of activity across all of our businesses. The economic effects will have a material impact on the group’s financial performance in 2020. The full impact remains uncertain and will be driven by the duration of the Covid-19 restrictions and the successful reopening of the economies of Ireland and the UK. “
The Bank of Ireland trade statement marks the beginning of a busy week for Irish banks, with AIB, TSB Permanente and KBC Bank Ireland, each set to report on the initial impact of Covid-19 on their numbers in the coming days. Ulster Bank has already reported that it took a net loan impairment charge of € 32 million during the first three months of the year.
Bank of Ireland deposits increased by € 1.8 billion to € 85.8 billion as nervous customers reserved money during the quarter. This contributed to the bank’s net interest margin, the difference between the average rates it finances and lends to customers, contracting by 0.03 from one percentage point to 2.07 percent as lenders face negative rates of as low as 0.5 percent. percent for excess funds deposited in the European Central Bank (ECB)
The bank’s loan portfolio grew by € 100 million to € 79.6 billion, with net loan growth of € 1.5 billion largely offset by currency movements.
The bank’s actual level of delinquent loans fell by € 100 million to € 3.4 billion over the course of the first quarter, resulting in a delinquency rate of 4.2 percent.
The bank’s Tier 1 Common Equity Index, a long-standing reserve indicator that is there to withstand a major shock loss, fell 0.3 percent to 13.8 percent during the quarter as the bank fell in territory with losses and continue to grow its asset base through new loans.
Still, the bank’s minimum regulatory capital requirements have decreased by 2.15 percentage points to 9.27 percent, as regulators in Britain, Ireland and the ECB relaxed the rules for banks to help them overcome the economic shock caused by the coronavirus pandemic.
The bank said it expects its capital levels to stay above the previous CET1 minimum requirement of 11.45 percent this year, even given its weakened outlook.
[ad_2]