3rd May 2023 10:33
(Alliance News) - Bank of Ireland Group PLC on Wednesday affirmed its full-year outlook, after reporting an increase in quarterly net income.
The Dublin-based lender said net interest income in the first quarter of 2023 is tracking in line with guidance of more than 12% higher than the fourth quarter of 2022 annualised run rate of about EUR3 billion.
"Progress reflects deposit and lending growth in Ireland, higher rates and business momentum," Bank of Ireland explained.
Business income, including share of associates and joint-ventures, is also in line with the company's full year guidance of a high single digit percent decline.
Bank of Ireland noted that costs have progressed in line with its expectations in the first quarter. It said it has maintained "rigorous cost discipline" while absorbing cost inflation and continuing to invest.
On a like-for-like basis, operating expenses, excluding levies and regulatory charges, are broadly flat. Reported operating expenses are 9% higher in the first quarter compared to the same period in 2022, reflecting the combined impacts of acquisitions.
Customer loan volumes were higher at EUR80.1 billion at the end of March 2023, versus EUR72 billion at the end of December 2022. The increase largely reflects the KBC Bank Ireland PLC portfolios onboarded during the first quarter of EUR8 billion.
Bank of Ireland completed the acquisition of KBC in February. At the time, it said the portfolios have projected total value of EUR7.8 billion of loans and EUR1.8 billion of deposits. In October 2021, the company signed a binding agreement for the acquisition.
Based on the KBC acquisition, the company's liquid assets of EUR43.5 billion have decreased by EUR5.2 billion since December 2022.
Meanwhile, customer deposits were EUR101 billion at end-March 2023, about EUR2 billion higher compared to December 2022. Bank of Ireland said this reflects the KBC deposit portfolio acquisition of EUR1.8 billion, continued growth in Retail Ireland deposits, partially offset by slightly lower Corporate & Markets and Retail UK deposit volumes.
Bank of Ireland's fully loaded CET1 ratio at March 31 was 14.4%, down from 15.4% in December.
Looking ahead, the lender said its full-year outlook remains unchanged. In March, Bank of Ireland said it targets a return on equity of around 15%, compared to 8.3% in 2022. Further, it expects like-for-like costs to be broadly in line with 2022.
"The group made a positive start to 2023 in terms of business performance, strategic delivery and sustainability," said Chief Executive Officer Myles O'Grady.
"We've performed in line with our expectations during Q1. Highlights include strong lending in Ireland, income and costs performance in line with our plans and a further reduction in our [non-performing loans] ratio. We also launched our refreshed group strategy (2023-25) as the National Champion bank with a unique opportunity from highly attractive markets and a differentiated business model."
Shares in Bank of Ireland were down 1.5% to EUR9.22 each in Dublin on Wednesday morning.
By Sophie Rose, Alliance News reporter
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