Bank of Ireland suffers on economic deterioration

Published on Tuesday 8 July 2008 21:50

A WEAKENING economy is hurting the Bank of Ireland's earnings and some business customers are finding it increasingly difficult to repay loans, the bank yesterday revealed.

Ireland's second-biggest bank by market value highlighted the risks posed by economic slowdown and global market turmoil at the time of its full-year results in May, but analysts said the tone of yesterday's statement pointed to a deterioration in outlook.

The bank said the slowdown had been most pronounced in its Irish retail business.

Rates of lending growth at its UK and international corporate banking operations in the second half of its last business year had continued into the first quarter to the end of June but were expected to moderate, Bank of Ireland added.

Richard Burrows, governor of Bank of Ireland's board, told his annual shareholders' meeting: "It's time for hard hats I'm afraid. It's time to run this bank in a very conservative way."

Scott Rankin, an analyst at Davy, said: "We have spoken to management this morning and they acknowledge the environment has changed considerably since the full-year results.

"Momentum has slowed and we will need to cut our (earnings] forecasts again by at least 5 per cent."

Rankin said the news also had implications for other banks, particularly Allied Irish.

Analysts at NCB said they expected to cut their earnings forecasts for Bank of Ireland by at least 10 per cent.

Shares in the bank last night closed down nearly 11 per cent at 4.48.