April 11, 2019 / 9:55 AM / 7 months ago

Bank of Ireland securitisation cuts bad loans, boosts capital

DUBLIN, April 11 (Reuters) - Bank of Ireland trimmed its non-performing loan (NPL) ratio to 5.9 percent of its loan book and improved its capital by 30 basis points after completing the securitisation of a portfolio of non-performing mortgages.

Ireland’s largest bank by assets said the portfolio made up of residential investment property loans had a gross value of 377 million euros ($425 million) and it would continue to keep strategies under review to further reduce its stock of bad loans.

The boost to capital was slightly better than anticipated, Davy and Goodbody Stockbrokers said on Thursday. The bank’s fully loaded core Tier 1 capital ratio - a measure of financial strength - stood at 13.4 percent at the end of 2018.

Irish banks have dramatically cut their levels of bad loans in recent years following a property crash a decade ago, chiefly by selling those loans in large chunks to non-banking entities, but they are increasingly looking towards securitisations to bring them closer to the European average of around 3 percent.

Permanent TSB said this week it would use a wider variety of approaches to reduce its stock of non-performing loans, while the head of Allied Irish Banks’ told a parliamentary committee on Thursday it could not ignore pressure from European regulators to continue to repair its balance sheet.

$1 = 0.8865 euros Reporting by Padraic Halpin Editing by David Holmes

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