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Updated February 26th, 2024 at 14:17 IST

Bank of Ireland to triple shareholder returns for second year running

This comes as the bank reported a nearly doubled full-year profit, largely attributed to higher interest rates.

Reported by: Business Desk
Bank of Ireland
Bank of Ireland | Image:Shutterstock

The Bank of Ireland is set to increase returns to its shareholders for the second consecutive year, with plans to more than triple the returns compared to the previous year. This comes as the bank reported a nearly doubled full-year profit, largely attributed to higher interest rates. The banking sector in Ireland, which relies heavily on interest revenue, has seen a boost in net interest income since the European Central Bank began raising rates 18 months ago.

In 2023, Bank of Ireland's pretax profit soared by 92 per cent to reach 1.9 billion euros. The company intends to distribute 1.15 billion euros to shareholders, with 634 million euros allocated for dividends and the remainder through share buybacks. The bank anticipates maintaining a robust capital position in 2024, with distributions again planned through dividends and share buybacks.

Despite the strong performance, the bank's net credit impairment charge doubled to 403 million euros, attributed to adjustments addressing potential risks, particularly in commercial real estate. However, Bank of Ireland's finance chief Mark Spain reassured that there's no significant stress evident across the bank's loan portfolios, and the charge related to commercial real estate is a proactive measure to mitigate future issues.

Looking ahead, the bank anticipates a decrease in net interest income in 2024 as the ECB is expected to lower rates. Analysts at Goodbody and Davy Stockbrokers highlighted that this guidance suggests Bank of Ireland's 2024 profit may fall below market expectations, with a potential 9 per cent reduction in Goodbody's forecast for the bank's underlying pretax profit.

(With Reuters Inputs)

Published February 26th, 2024 at 14:17 IST

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