Bank of Ireland Group plc
(the "Group")
Publishes Interim Results for
the 6 months to 30th June 2024
31
July 2024
Comment: Myles
O'Grady, Bank of Ireland Group CEO:
"The Group had an excellent
performance in the first half of 2024, reporting a profit of €1.1
billion, up 5%. This performance - underpinned by growth in our
loan book and wealth assets, higher income and robust capital
generation - supports upgraded earnings guidance for the
year.
"We are now half-way through our
three-year strategy. We're meeting or beating our targets and
investing for the future. This year we've announced a range of
improvements to our branches, ATMs, contact centre services and
fraud support for our customers. The launch of innovative green
mortgages and the expansion of agri-business green lending, and an
increased funding commitment for housing development were important
developments in H1.
"Our differentiated business model
operates in structurally attractive and growing markets and is
highly capital generative. These factors, complemented by our
single-minded focus on delivery, make us very well positioned to
continue to deliver attractive returns for our shareholders through
the current strategic cycle and beyond."
Key
highlights:
·
Strong strategic and financial performance supports upgraded
earnings guidance for FY 2024
·
€1.1 billion profit before tax
·
Strong capital position; fully loaded CET1 ratio
of 15.4% supported by net organic capital generation of 170 basis
points; commencement of interim ordinary dividends of €352 million
(35 cents per share), equivalent to 40% of H1 profit after
tax
·
Adjusted RoTE of 18.9%; statutory RoTE
16.4%
·
Cost to income ratio of 44%
· Net
interest income +2% on like-for-like basis, performing in-line with
guidance
· Net
lending €1.8 billion higher supported by €1 billion of growth
in Ireland
·
Business income (including share of associates and JVs) +6%,
performing in-line with guidance
·
Operating expenses +6%, performing in-line with
guidance
·
Levies and charges now expected to be €125-130 million vs
prior guidance of €160-165 million
· Net
credit impairment charge of €50 million, materially better than
expectations; upgraded guidance of c.20bps impairment charge vs
prior guidance of low 30s bps
·
Improved asset quality; NPE ratio now 2.9%; total coverage
maintained at 1.5%
· 24%
increase in Sustainable Finance lending vs H1 2023 to c.€12.5
billion; on track to deliver c.€15 billion target by
2025
Income
Net interest income growth of 2% in H1 2024 on
a like-for-like basis1. Performance reflects higher
interest rates, growth in lending income particularly in Ireland,
higher funding costs and continued strong commercial pricing
discipline.
Net interest income now expected to be c.€3.55
billion2, at the higher end of the guidance we gave with
our Q1 2024 Interim Management Statement.
Business income (including share of associates
and JVs) has increased 6%, and is performing in-line
with our FY 2024 guidance of mid-single digit percent
growth. This primarily reflects growth in Wealth and
Insurance and lower Retail UK commissions, partially offset by
lower Corporate and Commercial fee income.
Costs
Operating expenses have progressed
in-line with guidance in H1 2024. The Group continues to maintain
tight control over its cost base while absorbing inflation and
continuing to invest in strategic growth and simplification
opportunities. 2024 operating expenses are expected to be 5-6%
higher than 2023.
We expect levies and regulatory
charges to be €125 to €130 million in 2024, lower than our previous
guidance of €160 to €165 million, based on reduced Deposit
Guarantee Scheme contributions.
Non-core items (€11 million in H1)
were similar to the prior year. We continue to anticipate full year
non-core items to be similar to FY 2023.
Balance Sheet
The Group's loan book increased by €1.8 billion
during H1 2024. On a constant currency basis, the loan book
increased by €1.0 billion, with a €1.0 billion increase in Irish
non-property and a €0.4 billion increase in Retail UK, partially
offset by a €0.3 billion reduction in UK Personal Loans and a €0.1
billion reduction in Property and International Corporate and
other.
RWAs at June 2024 of €52.2 billion (€52.5
billion at end-December 2023) reflect investment in lending offset
by Credit Risk Transfer transaction benefits.
Our liquidity profile remains strong, supported
by our retail franchise in Ireland. Group deposits
have increased €0.6 billion in H1 2024 to €100.8 billion. This
increase reflects growth in Retail Ireland and Retail UK, partially
offset by lower Corporate and Commercial volumes. Migration by
customers into term/other products in Ireland was €1.3 billion in
H1 2024, and is in-line with our expectations.
At June 2024 the Group's liquidity coverage
ratio was 199% (2023: 196%), the loan to deposit ratio was 81%
(2023: 80%) and the net stable funding ratio was 153% (2023:
157%).
The Group's liquid assets of €44.4 billion have
increased by €0.8 billion since end-December 2023. Wholesale funding of €12.2 billion at June 2024 has
increased by €0.4 billion since end-December 2023 reflecting a
senior MREL issuance in Q1 2024.
Asset Quality
The Group reported an underlying net
credit impairment charge of €50 million (12bps annualised) in H1
2024 reflecting an improved macroeconomic outlook, model changes,
movement in management adjustments, and actual loan loss experience
in the period.
The Group's NPE ratio was 2.9% of
gross customer loans at June 2024 (end-December 2023 NPE ratio:
3.1%). Total coverage levels were maintained at 1.5% on gross
loans. The Group continues to focus on achieving further asset
quality improvements through a combination of organic and inorganic
activity.
Capital
Position
Strong capital position at June 2024
with the Group's pro forma fully loaded CET1 capital ratio at
15.4%3 including H1
unaudited profits and a deduction for an interim ordinary dividend
(31 December 2023: 14.3%). The Group's capital performance
benefitted from strong net organic capital generation of 170 basis
points and a slight net reduction in RWAs, partially offset by a
deduction for the interim dividend. The Group is re-commencing
interim ordinary dividend distributions, resulting in a dividend of
€352 million (35 cents per share), equivalent to 40% of H1 profit
after tax.
Sustainable
Company
There was further progress on our
Sustainability strategy, as we continue to focus on practical,
meaningful ESG interventions. Most notably, we continue to be the
#1 provider for green mortgages in Ireland, and have expanded our
sustainable agri-lending partnerships. We have now provided
sustainable finance of c.€12.5 billion, which represents an
increase vs H1 2023 of 24%. We are well on track to meet our c.€15
billion target for 2025 and c.€30 billion for 2030.
Outlook
upgraded
2024 net interest income is expected
to be c.€3.55 billion, reflecting interest rates, business momentum
and funding costs. Business income (including share of associates
and JVs) is expected to be mid-single digit percent higher in 2024
versus 2023.
2024 operating expenses are expected
to be 5-6% higher than 2023 reflecting inflation, business growth
and additional investment to future proof our business, partially
offset by efficiencies. We now expect levies and regulatory charges
to be €125-130 million in 2024.
In 2024, subject to no material
change in economic conditions or outlook, we expect the impairment
charge to be c.20 basis points versus previous guidance of a charge
in the low 30s basis points.
We now expect 2024 RoTE to be ahead
of the 2023 level of 17.3%, versus >15% previously.
We expect strong capital generation
to continue through H2 2024, with 310 to 320 basis points of net
organic capital generation for the full year (versus 260-280 basis
points previously). We expect Basel IV implementation in 2025 to
reduce RWAs by up to 5%. The Group expects 2024 distributions to
comprise a combination of ordinary dividends, with a progressive
dividend per share on earnings, and share buybacks with an
objective to distribute to our CET1 guidance of >14% (subject to
necessary approvals).
Financial
Targets
The Group remains on track to continue
delivering the financial targets contained in the 2023-2025
strategic cycle.
1 UK personal loans, which were
moved to non-core in H2 2023, contributed €42 million to H1 2023
reported NII.
2 Based on market expectations
for interest rates at end-2024: ECB deposit rate of 3.25%, BOE base
rate of 4.75%, Fed Funds rate of 5.00%.
3 The Group's reported fully
loaded CET1 ratio was 14.4%, reflecting the mechanical exclusion of
H1 profits in accordance with recent EBA Q&A
guidance.
Ends
https://investorrelations.bankofireland.com/results-centre/
For further information please
contact:
Bank of Ireland
Mark Spain, Group Chief Financial Officer
+353 1
2508900 ext 43291
Eamonn Hughes, Chief Sustainability &
Investor Relations Officer
+353
(0)87 2026325
Darach O'Leary, Head of Group
Investor Relations
+353 (0)87 9480650
Damien Garvey, Head of Group External
Communications and Public Affairs
+353 (0)86 8314435
Forward Looking Statement
This announcement contains
forward-looking statements with respect to certain of the Bank of
Ireland Group plc (the 'Company' or 'BOIG plc') and its
subsidiaries' (collectively the 'Group' or 'BOIG plc Group') plans
and its current goals and expectations relating to its future
financial condition and performance, the markets in which it
operates and its future capital requirements. These forward-looking
statements often can be identified by the fact that they do not
relate only to historical or current facts. Generally, but not
always, words such as 'may,' 'could,' 'should,' 'will,' 'expect,'
'intend,' 'estimate,' 'anticipate,' 'assume,' 'believe,' 'plan,'
'seek,' 'continue,' 'target,' 'goal,' 'would,' or their negative
variations or similar expressions identify forward-looking
statements, but their absence does not mean that a statement is not
forward-looking.
Examples of forward-looking
statements include, among others: statements regarding the Group's
near term and longer term future capital requirements and ratios,
loan to deposit ratios, expected impairment charges, the level of
the Group's assets, the Group's financial position, future income,
business strategy, projected costs, margins, future payment of
dividends, future share buybacks, the implementation of
changes in respect of certain of the Group's pension schemes,
estimates of capital expenditures, discussions with Irish, United
Kingdom, European and other regulators, plans and objectives for
future operations, and the continued impact of Russia's invasion of
Ukraine and the Israeli-Palestinian conflict particularly on
certain of the above issues and generally on the global and
domestic economies. Such forward-looking statements are inherently
subject to risks and uncertainties, and hence actual results may
differ materially from those expressed or implied by such
forward-looking statements.
Such risks and uncertainties include,
but are not limited to, those as set out in the 'Principal Risks
and Uncertainties' section on page 26 of the Group's 2024 Interim
Report and also the discussion of risk in the Risk Management
Report in the Group's Annual Report for the year ended 31 December
2023.
Nothing in this announcement should be
considered to be a forecast of future profitability, dividend
forecast or financial position of the Group and none of the
information in this announcement is or is intended to be a profit
forecast, dividend forecast, or profit estimate. Any
forward-looking statement speaks only as at the date it is made.
The Group does not undertake to release publicly any revision to
these forward-looking statements to reflect events, circumstances
or unanticipated events occurring after the date hereof.