Bank of Ireland IRE reported a profit before tax of EUR 80 million for the six months ended Sept. 30, but only because it benefited from a EUR 1,037 million gain on the repurchase of its own debt and other one-time items. The struggling bank's underlying loss before tax was EUR 979 million. We are leaving the bank unrated, as it continues to face substantial uncertainties, especially surrounding the potential impact of Ireland's proposed National Asset Management Agency and business restructurings that may be required by the European Union. Bank of Ireland had a difficult quarter across the board, but especially in its commercial property and construction segment, where provisions for loan losses increased to EUR 1.135 billion, or an annualized 6.4% of these loans, compared with just EUR 125 million in the year-ago half. For the bank as a whole, loan-loss provisions increased to EUR 1.787 billion, or an annualized 2.6% of loans, from EUR 267 million in the year-ago half. The net interest margin fell 10 basis points to 1.61% as competition for deposits intensified, and loans to customers fell to EUR 131 billion from EUR 144 billion a year ago. As a result, net interest income fell 24% to EUR 1.477 billion.The bank has made some progress addressing its many problems, but we think it still has a long way to go. Bank of Ireland reduced its loan/deposit ratio to 152% from 161% in March, but it remains well above the 100% level we'd prefer to see. Tier 1 capital increased to 11% but we remain concerned that it may not be enough to absorb the losses ahead.
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Analyst Notes
10-01-09 | 10:02AM Irish Bank Bailout Debated
09-03-09 | 11:57AM BOI's Future Remains Cloudy
05-11-09 | 2:43PM Bank of Ireland Gets Government Capital
More Analyst Research
Bank of Ireland (Governor & Co of) Full Analyst Report
Analyst Notes
10-01-09 | 10:02AM Irish Bank Bailout Debated
09-03-09 | 11:57AM BOI's Future Remains Cloudy
05-11-09 | 2:43PM Bank of Ireland Gets Government Capital
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