May 3, 2019 / 7:17 AM / 5 months ago

Bank of Ireland reports 3 percent loan book growth, cuts costs

FILE PHOTO: Sunlight is reflected off a deposit box on the exterior of a Bank Of Ireland branch in Belfast November 12, 2010. REUTERS/Cathal McNaughton

DUBLIN (Reuters) - Bank of Ireland expanded its loan book at a faster rate in the first quarter, it said on Friday, building on growth achieved last year for the first time in a decade.

Loan volumes grew almost 3 percent to 79.1 billion euros (£67.7 billion), said Ireland’s largest bank by assets, reflecting growing confidence in the country’s fast growing economy.

Currency-related tailwinds delivered all bar 600 million euros of the 2.1 billion euro increase but the underlying jump was equivalent to almost half of the growth attained in 2018.

The bank said operating expenses fell 3.5 percent year-on-year in the quarter. It plans to reduce its cost income ratio to 50 percent by 2021 from around 65 percent at the end of 2017.

While its net interest margin (NIM) fell to 2.16 percent from 2.20 percent at the end of 2018, that was in line with where Bank of Ireland said it expected margins to settle this year.

Management remains comfortable with NIM guidance of 2.16 percent for the remainder of 2019, Davy Stockbrokers said in a note.

Analysts at Davy also said signs of weaker Irish mortgage lending in the quarter should be rectified as the year progresses with pricing action not required for now.

“The mortgage market share for Q1 2019 was weak at 23 percent, but activity levels on drawdowns and approvals increased as the quarter progressed, indicating that a recovery back to the target share range of 25-30 percent should occur over the remainder of the year,” they said in a note.

“Signs that SME activity levels are increasing should also be welcomed.”

Reporting by Padraic Halpin; editing by Jason Neely

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