24th Nov 2005 07:00
Bank of Ireland(Governor&Co)24 November 2005 BANK OF IRELAND GROUP Interim Statement For the half year to 30 September 2005 HIGHLIGHTS STRONG GROUP PROFIT PERFORMANCE Profit before Tax +28% Basic Earnings Per Share +30% Underlying Profit before Tax +8% Underlying Earnings Per Share +10% Dividend +10% ROE 25% Retail Republic of Ireland +16% Bank of Ireland Life (Operating Profit) +30% Wholesale Financial Services +12% UK Financial Services (in local currency) -7% Asset Management Services -27% SIGNIFICANT ASSET GROWTH Retail Republic of Ireland +24% Wholesale Financial Services +27% UK Financial Services (in local currency) +19% STRONG CAPITAL POSITION Tier 1 Capital 7.3% Total Capital 10.6% ASSET QUALITY REMAINS STRONG "This has been an excellent first half performance by Bank of Ireland Group.Dynamic growth in strongly performing economies, sound investment strategies inareas of potential opportunity and a firm focus on maintaining excellent assetquality are the factors that underlie this performance. This performance,together with progress on the implementation of our Strategic TransformationProgramme gives us confidence for the future." Brian GogginGroup Chief Executive24 November 2005 Basis of Presentation The Operating and Financial Review set out on pages 4 to 14 compares the sixmonth performance under IFRS for the period ending 30 September 2005 with theProforma Accounts for the half year ended 30 September 2004, as published in ourIFRS Transition document which was released on 27 September 2005. The statutory IFRS accounts for the period ended September 2004, on page 16 ofthis document, are prepared in accordance with the standards that wereimplemented by the Group with effect from 1 April 2004. IAS 32, IAS 39 and IFRS4 are effective only from 1 April 2005 and therefore have not been applied inrestating the IFRS statutory position for the six months ended September 2004.These standards impact the accounting for derivatives, income recognition onloans (Effective Interest Rate (EIR)), accounting for insurance contracts, loanloss provisioning and the classification of financial instruments. The Group Proforma profit and loss account for the six months ended September2004 on page 10 of this document reflects the impact of EIR, insuranceaccounting and the classification of financial instruments, but does not adjustfor the impact of accounting for derivatives and loan impairment. Interim Statement For the half year to 30 September 2005 FINANCIAL SUMMARY RESULTS Half Year Half Year Change Half Year Sept 2005 Sept 2004 2005 vs Sept 2004 Proforma Proforma Statutory 2004 •m •m % •m ___________________________________________ Total Income 1 1,649 1,553 6 1,583 Operating Expenses 2 962 930 3 927______________________________________________________________________________Profit before tax 848 664 28 697 Non-core items 1+2 183 50 - 50 Underlying profit before tax 665 614 8 647______________________________________________________________________________ PER UNIT OF €0.64 ORDINARY STOCK Basic earnings per share (Note 9) 74.6c 57.2c 30 60.2cUnderlying earnings per share 3 57.3c 51.9c 10 54.9cDividend per share 18.2c 16.6c 10 16.6c BALANCE SHEET Total assets 146,260 117,679Total equity 4,566 4,304 Capital Ratios Tier 1 capital 7.3% 7.6%Total capital 10.6% 10.7% Key Ratios Net interest margin 1.79% 1.98% -19bpsCosts/total income 57.4% 59.2% -1.8%Return on average equity 25% 24% +1% 1. Net of insurance contract liabilities and claims (September 2005: €696m, September 2004: €282m) and after excluding the effect of non-core items: (a) gains on disposal of business activities (September 2005: €183m, September 2004: €31m), (b) gross up of income for policyholder tax in the Life business (September 2005: €31m, September 2004: €13m), (c) charge for hedge ineffectiveness (September 2005: €21m, September 2004: nil) and (d) restructuring programmes (September 2005: nil, September 2004 €11m). 2. After excluding the effect of the restructuring programmes, which are treated as non-core items, (September 2005: €10m, September 2004: €5m). 3. Underlying earnings per share excludes the after tax net effect of the non-core items listed on page 4 of this document (September 2005: €150m, September 2004: €38m) and based on the average number of shares in issue (including Bank of Ireland own shares held for the benefit of Bank of Ireland Life policyholders) September 2005: 970.3 million, September 2004: 965.9 million. BANK OF IRELAND GROUP Interim Results For the six months to 30 September 2005 Operating and Financial Review The Bank of Ireland Group is pleased to announce a strong performance for thesix months to 30 September 2005, continuing the excellent track record ofgrowth. The Group's profit before tax for the six months to 30 September 2005was €848 million an increase of 28% compared with the proforma result for thesix months to September 2004. The comparable underlying performance excludingnon-core items as outlined below, shows a Group profit before tax increase of8%. Basic earnings per share for the six months increased by 30% to 74.6cagainst a proforma outturn for the six months to 30 September 2004. Excludingthe overall positive effect from non-core items in both periods, underlyingearnings per share increased by 10% to 57.3c. These results we believe reflectthe inherent strengths of our business, which continues to deliver excellentreturns for the Group's stockholders. Half Year Half Year Change Half Year 30 Sept 30 Sept 2005 vs 30 Sept 2005 2004 Proforma 2004 Proforma 2004 Statutory •m •m % •m __________________________________________ Group Profit before Tax 848 664 +28 697 Gain on Disposal of Business (183) (31) (31) Activities Hedge Ineffectiveness 21 - - Gross up for Policyholder (31) (13) (13) Tax Restructuring Programmes 10 (6) (6) __________________________________________ Underlying Profit before Tax 665 614 +8 647 ==========================================The Group performance is based on excellent growth in our Irish franchise,significant progress towards our growth objectives in our UK and internationalbusinesses, and is underpinned by our presence in two of Europe's bestperforming economies. This is being achieved without any compromise on assetquality. Our Retail Financial Services business ("RFSI" - Retail Banking Republic ofIreland and Bank of Ireland Life) enhanced its position in Ireland withcontinuing strong volume, market share and profit growth. This has been achievedagainst a background of strong economic growth in Ireland that is forecast tocontinue, and a very competitive marketplace. RFSI with market share gains inmortgages, life and business banking has consistently outperformed the marketover recent years. The enhanced branch based customer service programme recentlylaunched will underpin our competitive position in this market and furtherdifferentiate Bank of Ireland from the competition. Wholesale Financial Services continued its business and profit growthtrajectory. Building on a strong domestic franchise we continue to successfullydevelop our international niche business. The restructuring of the UK Financial Services business was completed during thesix months with the sale of the Bristol & West branch network, and we are nowwell positioned to benefit from the improving economic environment in the UKwith a clear focus on our chosen market segments. Our UK business is achievingstrong volume growth and winning market share in both mortgages and businessbanking, and the UK Post Office Financial Services business is progressing inline with expectations. Asset Management Services, which accounted for 7% of overall Groupprofitability, continues to face challenges of investment underperformance andbusiness outflows in Bank of Ireland Asset Management (BIAM). BIAM's focusremains on improving its investment performance, while the Division continues toexplore opportunities to exploit its global distribution expertise andcapability. Significant progress has been made in the delivery of our StrategicTransformation Programme announced in March 2005. Cost savings of €10 millionwere achieved in the six months to end September and we are on target to achieveour financial objective of €30 million in the first year of the Programme. Thecost income ratio for the half year to end September 2005 was 57.4% compared to59.2% for the same period to end September 2004. Our business strategy continues to deliver excellent results - generating strongreturns from our leading position in Ireland, substantially growing ourbusinesses in the UK and growing our portfolio of niche, skill-based businessesinternationally. We have strong franchises in our chosen markets and a trackrecord of exploiting growth opportunities and outperforming the market. Outlook The outlook for the two main economies in which we operate remains positive. Ourpositions in these markets, combined with clear growth plans, the benefits fromthe Strategic Transformation Programme and a continuing firm focus on assetquality gives us confidence for the future. Business Review Divisional Performance Half Year Half Year Change 30 Sept 30 Sept 2005 vs 2005 2004 Proforma Proforma 2004 •m •m % __________________________________ Retail Republic of Ireland 265 228 16Bank of Ireland Life 68 40 70Wholesale Financial Services 196 175 12UK Financial Services 164 179 (8)Asset Management Services 51 70 (27)Group and Central* (79) (78) (1) __________________________________Underlying Profit before Tax 665 614 8 ================================== * including UK Post Office Financial Services Retail Republic of Ireland Retail Republic of Ireland had an excellent performance in the six months toSeptember 2005. Profit before tax was €265 million, an increase of €37 million or 16% over thecorresponding period last year. Very strong income growth was achieved, costswere well contained and asset quality is excellent. Net interest income rose by 10% reflecting strong growth in lending volumes.Total lending increased by 24%, with mortgage volumes rising by 26%. BusinessBanking lending was buoyant growing by 27%, while personal lending volumes were13% higher. Resources volumes also performed well with growth of 16%. The effectof the continuing low interest rate environment on liability spreads, togetherwith balance sheet growth and associated higher wholesale borrowings continuedto impact net interest margin. Non interest income recorded good growth of 8% with personal lending fees, salesof Group products and other branch fee income performing strongly. Costs increased by 6% arising from salary increments, higher pension costs andbusiness growth. The loan loss charge at €23 million was unchanged from the previous year and, asa percentage of average advances, fell from 17 basis points to 14 basis points. Bank of Ireland Life Bank of Ireland Life is growing strongly with new business sales up by 24% inthe period under review. All segments of the product range are performing wellwith the single premium market showing particular buoyancy. We continue to growmarket share. Operating profits (before the benefit of a discount rate reduction, a positiveinvestment variance and grossing up for policyholder tax) are ahead by 30%.Profit before tax and before grossing up for additional policyholder tax isahead 70%. The performance reflects strong business growth and a favourableproduct mix, underpinned by rising investment markets and cost growth restrictedto 4%. Wholesale Financial Services Profit before tax in Wholesale Financial Services increased by 12% to €196million mainly driven by an excellent performance in Corporate Banking. Net interest income has increased by 19% in the half year, mainly driven bystrong lending growth in Corporate Banking, where the loan book was 27% higheras at September 2005 compared to September 2004. Other income has increased by4%, in the corresponding period last year some significant once-off fees wereincluded.Total costs rose by 13% reflecting increased investment costs in the business(including the effect of Burdale acquisition) as the businesses in this divisioncontinues to invest for future growth, excluding these investment costsunderlying costs increased by 6%.Loan losses are €17 million and compare to €18 million in the first half of lastyear, reflecting the strong quality and well diversified nature of CorporateBanking's lending book and the generally benign credit environment. Loan lossesas a percentage of the loan book are 19bps for the half year to 30 September2005, compared to 26bps for the full year to 31 March 2005 (26bps for the halfyear to 30 September 2004). UK Financial Services (In local currency) Profit before tax is £112 million (excluding the profit on the disposal of theBristol & West branch network), a 7% decrease over the prior year. The prioryear included a technical release of loan loss provisions of £10 million, andexcluding this item the profit for the six months is similar to the prior year. As already announced the Bristol & West branch network was sold in September2005 to Britannia Building Society, and this resulted in a pre-tax gain of £124million. The total UKFS loan book grew by 19% to £28 billion over the same period lastyear. The resources decreased by £4.5 billion due to the sale of the branchnetwork. Net interest income which grew by 8% has benefited from the strong loangrowth. Non interest income is down 38% compared to 30 September 2004 impactedby the sale of Chase de Vere in the second half of last year, and lower feebased product sales in the Bristol & West branch network prior to the sale.Costs have fallen by 8% due to the sale of Chase de Vere and lower operatingcosts in the branch network prior to sale.Profits in our mortgage business are up 12% compared to 30 September 2004. Themortgage book has increased by 15% and asset quality remains strong. Arrearslevels continue to run at a significantly lower level than industry average. Business Banking profits, excluding the £10 million loan loss provision releasereferred to above, are in line with the previous year. The loan book has grownby 32% with asset quality remaining high, and resources have grown by 6%. Asset Management Services Asset Management Services, which incorporates the Group's asset management andsecurities services businesses, saw pre-tax profits fall by €19 million to €51million over the same period last year. This decline was mainly driven by a reduction in assets under management in Bankof Ireland Asset Management (BIAM) which fell by 21% to €44 billion at the endof September 2005. BIAM's focus remains on improving its investment performance,while the Division continues to explore opportunities to exploit its globaldistribution expertise and capability. Assets under management in Iridian increased by 12% to $10.4 billion at 30September 2005 and the company's relative investment performance continues to bestrong over the medium term. Bank of Ireland Securities Services, the custody and fund administrationbusiness continues to perform well and experienced strong profit growth over thesame period last year. Group and Central Group & Central includes the results of UK Post Office Financial Services(UKPOFS), together with earnings on Group surplus capital, unallocated central &support costs and some smaller business units. In the six months to 30 September 2005 UKPOFS incurred a loss of £12 millioncompared to a loss of £21 million in the six month period to 31 March 2005 and aloss of £11 million in the corresponding period last year. UKPOFS continues tobuild its customer base with over 225,000 customers now recruited. The UKPOFSwas treated as an associated company from 1 April 2004 to 31 July 2004 and as afully consolidated entity from 1 August 2004. The profit before tax impact(before minority interest) on Bank of Ireland which includes the amortisation ofcertain assets of €6 million in both periods, amounts to a loss of €24 millioncompared to a loss of €20 million for the prior period. The remainder of Group and Central had a net cost of €55 million to 30 September2005, compared to €58 million in the corresponding period last year. Theimprovement is driven by the return from higher levels of retained earningspartly offset by higher compliance related spend. Financial Review Bank of Ireland Group Consolidated Income Statement Half Year Half Year Half Year 30 Sept 30 Sept 30 Sept 2005 2004 2004 Statutory Proforma Statutory •m •m •m __________________________________Net Interest Income 1,075 961 941 __________________________________Insurance net premium income 529 286 795Life assurance investment income 312 89 203and gainsOther Income 439 523 543Profit on Disposal of Business 183 31 31Activities __________________________________ 1,463 929 1,572 __________________________________Total Operating Income 2,538 1,890 2,513 Increase in Insurance ContractLiabilities and Claims paid (696) (282) (875) __________________________________Total Operating Income net ofInsurance Liabilities 1,842 1,608 1,638 Operating Expenses (972) (935) (932) Impairment losses on Loans and (50) (28) (28)Advances Share of Associates & Joint 28 19 19Venture __________________________________ Profit before Tax 848 664 697 Taxation (139) (118) (121)Minority Interest 3 (2) (5)Dividends from other equity (6) (5) (4)interests __________________________________ Profit Attributable to ordinary 706 539 567stockholders =================================== Basic EPS 74.6c 57.2c 60.2cUnderlying EPS 57.3c 51.9c 54.9c Income Net Interest Income Half Year Half Year Change 30 Sept 2005 30 Sept 2004 2005 vs Proforma Proforma 2004 _______________________________________ Net Interest Income (•m) 1,075 961 +12% Average Earning Assets 120(i) 97(i) +23% (•bn) Net Interest Margin (bps) 179 198 -19 Domestic Net Interest 186 210 -24 Margin (bps) Foreign Net Interest 166 178 -12 Margin (bps) _______________________________________ (i) Financial assets held for trading and debt securities designated in the Lifebusiness as fair value through the income statement are excluded from averageearning assets and consequently the net interest margin calculation. The Group's net interest income has grown by 12% to €1,075 million for the sixmonths to September 2005 compared with the six months to September 2004, drivenby strong lending growth throughout the Group. The Group average earning assetshave increased by 23% from €97 billion at September 2004 to €120 billion atSeptember 2005. The Group's net interest margin at September 2005 was 1.79% a 19bps reduction onthe same period last year. The reduction in the Group net interest margin wascaused by the pace of lending growth exceeding the growth of deposits withhigher associated wholesale borrowings, the low interest rate environment andits impact on liability spreads together with the effect of the back bookre-pricing in the UK, which is now almost fully re-priced. Other Income Half Year Half Year Change Half Year 30 Sept 2005 30 Sept 2005 vs 30 Sept 2004 2004 Proforma Statutory Proforma 2004 •m •m % •m _______________________________________________ Insurance net premium income 529 286 +85 795Life assurance investment income 312 89 +251 203Other Income 439 523 -16 543Profit on Disposal of Business 183 31 - 31Activities _______________________________________________ 1,463 929 +57 1,572 _______________________________________________Excluding -Grossing up for policyholder tax in 31 13 13the Life businessHedge ineffectiveness (21) - -Disposal of business activity 183 31 31Restructuring/provision releases - 11 11 _______________________________________________ 1,270 874 +45 1,517Insurance claims, increase inpolicyholder liabilities (696) (282) (875) _______________________________________________ Net underlying Other Income 574 592 -3 642 =============================================== Other Income for the six months to September 2005 was up 57% or €534 million to€1,463 million, compared with the same period last year. Excluding the grossingup for policyholder tax in the Life business, hedge ineffectiveness, disposal ofbusiness activity and restructuring/provision releases, the comparable growthfor the six months to September 2005 was 45% or up €396 million. The Lifebusiness was a key driver of this growth, where excellent sales have resulted ininsurance premiums increasing by €243 million to €529 million. Strong stockmarket performance has resulted in growth of life assurance investment income up€223 million to €312 million. Insurance claims and increase in policyholderliabilities increased by €414 million to €696 million for the six month periodto September 2005 driven by the same two factors of excellent sales and strongstock market performance. On an underlying basis other income fell by 3% from €592 million to €574 millionin the six months to September 2005. The six months to 30 September 2004included €25 million of fee income relating to Chase de Vere which was sold inMarch 2005 and excluding this other income was up 1%. Fee income was lower by€25 million in BIAM. The overall benefit of the Life business to underlyingother income growth was €28 million, with our Irish retail businesses alsoperforming well, where we have seen good growth in personal lending fees, othernetwork related fees with other income growing by €12 million. Operating Expenses Half Year Half Year Change Half Year 30 Sept 2005 30 Sept 2004 2005 vs 30 Sept 2004 Proforma Proforma Statutory 2004 •m •m % •m ____________________________________________________ Operating Expenses 972 935 4 932 Restructuring Costs (10) (5) (5) ____________________________________________________ Core Operating Expenses 962 930 3 927 ==================================================== Core operating expenses which exclude costs relating to restructuring, haveincreased by €32 million or 3% to €962 million for the six months to September2005 compared with the six months to September 2004. The sale of Chase de Verehas had a positive effect on costs but this reduction has been partially offsetby the effect of the consolidation of UKPOFS in the current six months, as formost of the corresponding period last year this investment was treated as anassociated company. Operating expenses have been impacted by falling long termbond yields, resulting in a higher pension charge in the six months to September2005 compared with September 2004. Costs were also higher in our UK andWholesale businesses as we invest in growth initiatives. Our StrategicTransformation Programme has successfully delivered cost savings in the currenthalf year of €10 million. The core cost income ratio for the half year toSeptember 2005 was 57.4%, an improvement on the comparable September 2004 ratioof 59.2%. A positive cost income gap of 3% was achieved, reflecting the strongbusiness volume growth, good cost control and the positive impact resulting fromthe disposal of Chase de Vere which was sold in March 2005. Impairment of loans and advances The impairment charge for loans and advances was €50 million for the half yearto September 2005. The charge for the six months to September 2004 of €28million, included a technical loan loss release of £10 million (€15 million).Asset quality remains strong, with the loan loss charge for the half year toSeptember 2005 representing 11bps of the average loans for the period. Impairedloans of €693 million as at 30 September 2005, compared to €710 million as at 31March 2005 and €682 million at 30 September 2004. Impairment provisions as a percentage of impaired loans was 50% as at 30September 2005. Capital & Reserves The return on equity for the half year was 25%. Capital ratios remain verystrong, with Tier 1 Capital at 7.3% and Total Capital at 10.6%. Effective Rate of Tax The taxation charge for the Group was €139 million compared to €118 million inthe half-year to September 2004. The effective tax rate was 16.4% compared to 17.8% in the half-year to September2004. The effective tax rate was lower compared to the half-year to September2004 mainly due to the benefit from the non-taxable gains in relation to thedisposal of the Bristol & West branch network which was partially offset by theincrease in the Bank of Ireland Life grossing-up for policyholder tax requiredunder IFRS. Dividend As in prior years, in accordance with Group policy that the interim dividend, innormal course, shall be set at 40% of the total distribution per unit of stockfor the prior year, the Directors have declared an interim dividend of 18.2 centfor each unit of Ordinary Stock, an increase of 10% over the correspondingperiod last year. This dividend will be paid on 11 January 2006 to stockholderswho are registered as holding Ordinary Stock at the close of business on 16December 2005. The Group dividend policy which under Irish GAAP was set at a target payoutratio of 40% will be impacted by the introduction of IFRS. As the fundamentalcash flows of the business have not changed on the transition to IFRS the targetpayout ratio under Irish GAAP will be adjusted upwards. For further information:John O'Donovan Group Chief Financial Officer 353 1 632 2054Geraldine Deighan Head of Group Investor Relations 353 1 604 3501Dan Loughrey Head of Group Corporate 353 1 604 3833 Communications Forward Looking Statement This document contains certain forward-looking statements as defined in the USPrivate Securities Litigation Reform Act of 1995 with respect to certain of theGroup's plans and its current goals and expectations relating to its futurefinancial condition and performance and the markets in which it operates.Because such statements are inherently subject to risks and uncertainties,actual results may differ materially from those expressed or implied by suchforward-looking statements. Such risks and uncertainties include but are notlimited to risks and uncertainties relating to profitability targets, prevailinginterest rates, the performance of the Irish and the UK economies, theperformance and volatility of international capital markets, the expected levelof credit defaults, the Group's ability to expand certain of its activities,development and implementation of the Group's strategy, including the ability toachieve estimated cost reductions, competition, the Group's ability to addressinformation technology issues and the availability of funding sources. Anyforward-looking statements speak only as of the date they were made. The Bank ofIreland Group does not undertake to release publicly any revision to theseforward-looking statements to reflect events, circumstances or unanticipatedevents occurring after the date hereof. The reader should however, consult anyadditional disclosures that the Group has made or may make in documents it hasfiled or submitted or may file or submit to the U.S. Securities and ExchangeCommission. CONSOLIDATED INCOME STATEMENT (unaudited) Half Year Half Year Year 30-9-2005 30-9-2004 31-3-2005 •m •m •m __________________________________ INTEREST INCOME (Note 3) 2,929 2,188 4,263 INTEREST EXPENSE (Note 4) (1,854) (1,247) (2,332) __________________________________ NET INTEREST INCOME 1,075 941 1,931 Insurance net premium income 529 795 1,791 __________________________________Fees and commissions income 457 562 1,163Fees and commissions expense (97) (115) (263) __________________________________Net fees and commissions income 360 447 900Net trading income 11 33 66Life assurance investment income and gains 312 203 695Other operating income (Note 5) 68 63 138Profit on disposal of business activity 183 31 11 __________________________________ TOTAL OPERATING INCOME 2,538 2,513 5,532Increase in insurance contract liabilities and (696) (875) (2,222)claims paid __________________________________ TOTAL OPERATING INCOME, NET OF INSURANCE CLAIMS 1,842 1,638 3,310 TOTAL OPERATING EXPENSES (Note 6) (972) (932) (2,051) __________________________________ OPERATING PROFIT BEFORE IMPAIRMENT LOSSES 870 706 1,259Impairment losses on loans and advances (Note 11) (50) (28) 21 __________________________________ OPERATING PROFIT 820 678 1,280Income from associated undertakings and joint 28 19 30ventures __________________________________ PROFIT BEFORE TAXATION 848 697 1,310Taxation (Note 8) (139) (121) (256) __________________________________PROFIT FOR THE PERIOD 709 576 1,054 ==================================Attributable to minority interests (3) 5 (1)Attributable to stockholders 712 571 1,055 __________________________________ PROFIT RETAINED FOR THE PERIOD 709 576 1,054 ================================== Earnings per unit of €0.64 ordinary stock (Note 9) 74.6c 60.2c 111.1c ================================== Diluted earnings per unit of €0.64 ordinary stock 74.0c 59.7c 110.2c(Note 9) ================================== CONSOLIDATED BALANCE SHEET (unaudited) 30-9-2005 1-4-2005 30-9-2004 31-3-2005 •m •m •m •m _______________________________________ ASSETSCash and balances at central banks 730 1,613 2,062 1,613Items in the course of collection from 722 560 593 560other banksCentral government and other eligible 180 8 1,350 1,607billsTrading securities (Note 12) 640 1,030 - -Derivative financial instruments 2,023 2,277 - -Other financial assets at fair value 9,277 8,115 - -through P/L (Note 12)Loans and advances to banks 9,658 8,347 8,659 8,347Available-for-sale financial assets (Note 26,522 20,841 - -12)Loans and advances to customers (Note 10) 91,286 79,988 72,743 79,836Debt securities - - 20,472 22,711Equity shares - - 5,160 5,716Interests in associated undertakings 17 17 15 17Interest in joint ventures 89 61 48 61Intangible assets - Goodwill 232 219 177 219Intangible assets - Other 569 573 530 573Investment property 620 503 442 503Property, plant & equipment 696 726 713 720Deferred tax asset 111 55 87 99Other assets 2,888 3,083 4,628 5,198 _______________________________________Total assets 146,260 128,016 117,679 127,780 ======================================= 30-9-2005 1-4-2005 30-9-2004 31-3-2005 •m •m •m •m _______________________________________ EQUITY AND LIABILITIESDeposits by banks 30,237 20,865 20,274 20,865Customer accounts (Note 13) 57,319 60,070 56,551 60,185Items in the course of transmission to 99 230 119 230other banksDerivative financial instruments 1,952 2,167 - -Liabilities to customers under investment 5,633 4,917 - -contractsDebt securities in issue 31,011 21,243 18,460 21,217Life assurance liabilities attributable - - 7,734 8,713to policy holdersInsurance contract liabilities 4,163 3,785 - -Other liabilities 4,582 4,914 5,641 6,756Deferred tax liabilities 163 144 204 212Other provisions 156 180 - 180Post retirement benefit obligations 1,236 924 741 924Subordinated liabilities (Note 14) 5,143 4,231 3,651 4,086 _______________________________________ Total liabilities 141,694 123,670 113,375 123,368 Equity Share capital (Note 15) 663 663 679 663Share premium account (Note 16) 766 765 765 765Capital reserve (Note 16) 376 310 554 561Retained profit (Note 16) 2,458 2,279 2,207 2,336Revaluation reserve (Note 16) 158 158 115 158Cash flow hedge reserve (Note 16) (10) 67 - -Available for sale reserve (Note 16) 196 137 - -Other equity reserve (Note 16) 123 114 - -Own shares held for the benefit of life (216) (206) (205) (206)assurance policyholders _______________________________________ Stockholders equity 4,514 4,287 4,115 4,277Minority interests 52 59 189 135 _______________________________________ Total equity 4,566 4,346 4,304 4,412 _______________________________________ Total equity and liabilities 146,260 128,016 117,679 127,780 ======================================= MEMORANDUM ITEMS (UNAUDITED) 30-9-2005 30-9-2004 31-3-2005 •m •m •m _____________________________________Contingent liabilitiesAcceptances and endorsements 30 27 34Guarantees and assets pledged as 1,241 1,233 1,268collateral securityOther contingent liabilities 631 513 643 _____________________________________ 1,902 1,773 1,945 ===================================== Commitments 29,086 26,239 29,296 ===================================== RECONCILIATION OF MOVEMENT IN TOTAL EQUITY (unaudited) Half Year Half Year Year 30-9-2005 30-9-2004 31-3-2005 •m •m •m Profit attributable to stockholders 709 576 1,054Dividends (282) (257) (417)Dividends on other equity interests (10) (12) (22)Exchange adjustments 53 (96) (113)Actuarial losses on pension funds (257) (201) (386) _____________________________________ 213 10 116Implementation of IAS32/IAS39 & IFRS4 as at 1 (66) - -April 2005 _____________________________________Total Recognised Income 147 10 116 Opening Stockholders' Equity 4,412 4,238 4,238 _____________________________________ 4,559 4,248 4,354 Revaluation of property - - 43Re-issue of treasury stock issued under 30 5 7employee stock schemeMovement in share based payment reserve 6 5 11Reissue of treasury stock previously held by - - 1subsidiaryMovement in cost of own shares held for benefit of (10) (22) (23)life assurance policyholdersNet fair value movement in available for sale 59 - -reserveNet fair value movement in cash flow hedge (77) - -reserveMinority interest acquired - 67 67Disposal of minority interest - - (42)Other (1) 1 (6) _____________________________________Closing Stockholders' Equity 4,566 4,304 4,412 =====================================Stockholders' equity:Ordinary stockholders equity 4,449 4,050 4,212Other equity interests 117 254 200 _____________________________________ 4,566 4,304 4,412 ===================================== CONSOLIDATED CONDENSED CASH FLOW STATEMENT (UNAUDITED) Half Year Half Year Year 30-9-2005 30-9-2004 31-3-2005 •m •m •m _____________________________________ Operating activities: Operating profit 820 678 1,280 Adjust for non cash items:Profit on disposal of businesses (183) (31) (11)Depreciation and amortisation 81 81 177Loan loss charge 50 28 (21)Movement on share based payments reserve 6 5 11Loss/(profit) on sale of property, plant and - (4) (8)equipmentInterest on subordinated liabilities 124 111 225 _____________________________________ Net cash flow from trading activities 898 868 1,653 Changes in operating assets and liabilities: 3,048 2,795 3,977 _____________________________________ Net cash flow from operating activities before 3,946 3,663 5,630tax and dividendDividend received - 14 14Taxation paid (40) (19) (155) _____________________________________ Net cash flow from operating activities 3,906 3,658 5,489 _____________________________________ Investing activities: Acquisitions/disposals of businesses 229 135 73Net purchases /sales of financial assets (5,485) (2,120) (4,155)Purchase of property, plant, equipment & (178) (73) (187)intangiblesProceeds from disposals of property, plant and 10 35 55equipment _____________________________________ Net cash flow from investing activities (5,424) (2,023) (4,214) _____________________________________ Financing activities: Interest paid on subordinated liabilities (30) (33) (223)Proceeds from issue of subordinated 883 - 587liabilitiesRepayment of subordinated liabilities - - (145)Proceeds from issue of ordinary stock 30 5 7Equity dividends paid (282) (257) (417)Dividends paid to minority interests (4) (8) (14)Dividends paid on other equity interests (6) (4) (8) _____________________________________ Net cash flow from financing activities 591 (297) (213) _____________________________________ Equals net (decrease)/increase in cash and (927) 1,338 1,062cash equivalents Cash and cash equivalents at start of period 6,240 5,198 5,198Exchange movements 10 (11) (20) _____________________________________ Cash and cash equivalents at end of period 5,323 6,525 6,240 ===================================== 1 BASIS OF PREPARATION Up to 31 March 2005 the Bank of Ireland Group ("the Group") prepared its Reportand Accounts in accordance with Irish Generally Accepted Accounting Principles(IR GAAP). From 1 January 2005 all listed companies in the EU are required toproduce consolidated accounts prepared under IFRS. The Group has implementedIFRS from 1 April 2005 and will produce its first full IFRS accounts for theyear ending 31 March 2006. In preparing this financial information management has used its best knowledgeof the expected standards and interpretations, facts and circumstances, andaccounting policies that will be applied when the Group prepares its first setof Accounts, in accordance with accounting standards adopted for use in the EU,as of 31 March 2006. As a result, although this financial information is basedon management's best knowledge of expected standards and interpretations, andcurrent facts and circumstances, this may change. Therefore, until the Groupprepares its first set of Accounts in accordance with accounting standardsadopted for use in the EU, the possibility cannot be excluded that theaccompanying financial information may have to be adjusted. Save as noted below, the Group complies with the EU endorsed version of IAS 39.This carved out version relaxes some of the hedge accounting requirements andprohibits the designation of non trading financial liabilities at fair valuethrough profit or loss. The Group has not taken advantage of any of the relaxedhedge accounting requirements. However the recent amendment to IAS 39 "FinancialInstruments: Recognition and measurement" in respect of the fair value optionpermits financial assets or liabilities, provided they meet certain criteria, tobe designated at fair value through the profit and loss account. The Group hasadopted the fair value option ahead of its effective date on the assumption thatit would be endorsed by the E.U. Consequently, the financial information hereinhas also been prepared in accordance with all extant accounting standards,interpretations and amendments issued by the IASB. The E.U. Commission hassubsequently endorsed the fair value option on the 15th November 2005retroactive to the 1st January 2005. The rules for first time adoption of IFRS are set out in IFRS 1 "First-timeAdoption of International Financial Reporting Standards". IFRS 1 requires theGroup to determine its IFRS accounting policies and apply these retrospectivelyto determine the opening balance sheet position under IFRS at the date oftransition. Details of the provisional IFRS accounting policies are set out inthe Transition statement issued on 27 September 2005. Transition to IFRS As set out in the basis of preparation, the interim financial information hasbeen prepared based on the recognition and measurement requirements of IFRS asendorsed by the E.U. Bank of Ireland has availed of transitional provisions forIAS 32 'Financial instruments: Disclosure and Presentation' ('IAS 32'), IAS 39'Financial Instruments: Recognition and Measurement' ('IAS 39') and IFRS 4 'Insurance Contracts' ('IFRS 4') and has not presented comparative information inaccordance with these standards. Accordingly, comparative information for 2004in respect of financial instruments and insurance contracts is prepared on thebasis of the Group's accounting policies under IR GAAP. A description of the differences between IR GAAP and IFRS accounting policies isset out in 'Transition to IFRS - Restatement of 31 March 2005 financialinformation' ('the transition document') on pages 16-25. Reconciliations ofbalance sheets prepared under IR GAAP and IFRS at 1 April 2004, 30 September2004, 31 March 2005 and 1 April 2005 are included in the transition document onpages 50-57. Reconciliations of the profit and loss account prepared inaccordance with IR GAAP and prepared in accordance with IFRS for the periodsending 31 March 2005 and 30 September 2004 are included in pages 48-49 of thetransition document. In addition, a reconciliation of the amount ofstockholders' equity at 1 April 2005, before and after the application of IAS32, IAS 39 and IFRS 4 is summarised below. The transition document is availableat www.bankofireland.ie. 1 BASIS OF PREPARATION (continued) The following table sets out the reconciliation from previously reported IrishGAAP information for profit after taxation and stockholders' equity forSeptember 2004 and March 2005, and the reconciliation to stockholders' equity at1 April 2005 after the application of IAS 32, IAS 39 and IFRS 4. Profit after Stockholders' taxation equity Half Year Year 30-9-2004 31-3-2005 30-9-2004 31-3-2005 •m •m •m •m _______________________________________ As reported under Irish GAAP 593 1,080 4,597 4,789 Reconciliation adjustments to IFRS excludingIAS 32, IAS 39 and IFRS 4:Consolidation of new entities and insurance 4 8 (59) (55)businessesLeasing consolidation (6) (8) 47 44Post retirement benefit obligations (13) (23) (500) (695)Property, plant and equipment - - (145) (102)Intangible assets & goodwill 6 13 6 12Dividends - - 160 282Employee benefits (4) (8) 1 3Other (4) (8) 8 (1) _______________________________________ IFRS excluding IAS 32, IAS 29 and IFRS 4 576 1,054 4,115 4,277 =======================================Reconciliation adjustments to IAS 32, IAS 39and IFRS 4:Reclassification of financial instruments 127Hedging (3)Write down of VIF in Life business (251)Debt/equity reclassification 114Effective interest rate 20Other 3 ____________________________ Stockholders' equity as at 1 April 2005 under IFRS 4,287including IAS 32/IAS39 and IFRS 4 ============================= 2 SEGMENTAL ANALYSIS The segmental analysis of the Group's results and financial position is set outbelow by geographic segment and by business class. For the geographic analysisRepublic of Ireland includes profits generated in the International FinancialServices Centre. Turnover is defined as gross interest income before interestpaid, non interest income and income from associates and joint ventures.Turnover by business class is not shown. The Group has six business classes. Theanalysis of results by business class is based on management accountsinformation. The segmental allocation of liabilities necessitates the allocationof capital on a risk related basis which is in some cases necessarilysubjective. The Directors believe that it is more meaningful to analyse totalassets and the result of this analysis is therefore also included in the tables. 2 SEGMENTAL ANALYSIS (continued) (a) Geographical Segment Half Year 30-9-2005 ____________________________________ Republic United Rest of of Kingdom World Total Ireland •m •m •m •m ____________________________________ Turnover 1,712 1,996 113 3,821 ====================================Profit before taxation 471 355 22 848 ==================================== Net assets 2,064 1,943 507 4,514 ==================================== Total assets (1) 128,727 60,096 3,997 192,820 ==================================== (a) Geographical Segment Half Year 30-9-2004 ____________________________________ Republic United Rest of of Kingdom World Total Ireland •m •m •m •m ____________________________________ Turnover 1,419 1,518 82 3,019 ==================================== Profit before taxation 500 176 21 697 ==================================== Net assets 2,044 1,599 472 4,115 ==================================== Total assets (1) 99,144 49,535 2,529 151,208 ==================================== (a) Geographical Segment Year 31-3-2005 ____________________________________ Republic United Rest of of Kingdom World Total Ireland •m •m •m •m ____________________________________ Turnover 2,573 3,170 192 5,935 ==================================== Profit before taxation 991 273 46 1,310 ==================================== Net assets 2,268 1,519 490 4,277 ==================================== Total assets (1) 109,606 50,551 4,262 164,419 ==================================== 2 SEGMENTAL ANALYSIS (continued) Half Year 30-9-2005 ___________________________________________________________________(b) Business Class Retail Republic Wholesale UK Asset Group of BOI Financial Financial Management & Ireland Life Services Services Services Central Total •m •m •m •m •m •m •m ___________________________________________________________________ Net interest income 546 4 181 335 5 4 1,075Insurance net premium - 515 - - - 14 529incomeLife assurance - 312 - - - - 312investment incomeOther income 158 7 139 59 110 (34) 439Profit on disposal of - - - 183 - - 183business activities ___________________________________________________________________Total income 704 838 320 577 115 (16) 2,538Insurance claims - (691) - - - (5) (696) ___________________________________________________________________Total income, net of 704 147 320 577 115 (21) 1,842insurance claimsOperating expenses (417) (48) (134) (222) (64) (87) (972)Impairment losses on (23) - (17) (8) - (2) (50)loans & advancesShare of operating 1 - 27 - - - 28profit from associates ___________________________________________________________________Profit before taxation 265 99(2) 196 347(3) 51 (110)(4) 848 ___________________________________________________________________ Taxation (139) ____________Profit for the period 709 ____________ Net assets 1,615 116 839 2,029 397 (482) 4,514 ___________________________________________________________________Total assets (1) 70,275 10,331 123,721 49,340 2,524 17,040 273,231 ___________________________________________________________________Total Risk Weighted 24,251 - 32,906 30,099 225 1,007 88,488Assets =================================================================== (1) Total assets include intra-group items of €126,971m (September 2004: €80,790m, March 2005: €104,264m) in business class and €46,560m (September 2004: €33,529m, March 2005: €36,639m) in geographic segments. (2) Includes €31m relating to the gross up for policyholder tax (3) Includes €183m relating to the sale of the Bristol & west branches to Britannia Building Society in September 2005. (4) Includes negative impacts of €21m relating to hedge ineffectiveness arising from new hedging rules under IAS39 and €10m relating to costs incurred under the strategic transformation programme. 2 SEGMENTAL ANALYSIS (continued) Half Year 30-9-2004 ___________________________________________________________________ (b) Business Class Retail Republic Wholesale UK Asset Group of BOI Financial Financial Management & Ireland Life Services Services Services Central Total •m •m •m •m •m •m •m _______________________________________________________________ Net interest income 496 5 141 307 2 (10) 941Insurance net premium - 778 - - - 17 795incomeOther income 149 198 152 126 133 (12) 746Profit on disposal of - - - - - 31 31business activities _______________________________________________________________Total income 645 981 293 433 135 26 2,513Insurance claims - (869) - - - (6) (875) _______________________________________________________________Total income, net of 645 112 293 433 135 20 1,638insurance claimsOperating expenses (388) (46) (119) (249) (65) (65) (932)Impairment losses on (23) - (18) 14 - (1) (28)loans & advancesShare of operating (1) - 24 - - (4) 19profit from associates _______________________________________________________________Profit before taxation 233 66 180 198(5) 70 (50)(6) 697 _______________________________________________________________ Taxation (121) _________Profit for the period 576 _________ Net assets 1,404 101 701 1,568 380 (39) 4,115 _______________________________________________________________Total assets (1) 54,885 7,996 78,864 39,929 1,898 14,897 198,469 _______________________________________________________________Total Risk Weighted 19,820 - 24,141 24,304 184 819 69,268Assets _______________________________________________________________ (5) Includes provisions released following the exit from leases (profit on the sale of properties) totalling €11m and implementation costs associated with the UKFS business improvement programme of €5m. (6) Includes profit of €31m on the sale of the Bank's 50% shareholding in EuroConex Technologies Limited to Nova EuroConex Holdings BV, a subsidiary of US Bancorp, on 29 June, 2004. 2 SEGMENTAL ANALYSIS (continued) Year 31-3-2005 _______________________________________________________________(b) Business Class Retail Republic Wholesale UK Asset Group of BOI Financial Financial Management & Ireland Life Services Services Services Central Total •m •m •m •m •m •m •m _______________________________________________________________ Net interest income 1,019 11 303 610 4 (16) 1,931Insurance net premium - 1,755 - - - 36 1,791incomeOther income 304 701 324 245 252 (27) 1,799Profit on disposal of - - - (20) - 31 11business activities _______________________________________________________________Total income 1,323 2,467 627 835 256 24 5,532Insurance claims - (2,216) - - - (6) (2,222) _______________________________________________________________Total income, net of 1,323 251 627 835 256 18 3,310insurance claimsOperating expenses (802) (90) (252) (497) (131) (279) (2,051)Impairment losses on (51) - (38) 14 - 96 21loans & advancesShare of operating (2) - 37 - - (5) 30profit from associates _______________________________________________________________Profit before taxation 468(7) 161 374 352(8) 125 (170)(9)1,310 _______________________________________________________________ Taxation (256) ________Profit for the period 1,054 ________ Net assets 1,403 101 722 1,622 377 52 4,277 _______________________________________________________________Total assets (2) 57,830 8,977 101,203 42,941 2,980 18,113 232,044 _______________________________________________________________Total Risk Weighted 21,969 - 26,454 26,029 284 1,156 75,892Assets =============================================================== (7) Includes the write off of goodwill associated with Venson for the impairment of certain assets amounted to €4m. (8) Includes: a. Implementation costs of €10m associated with the UKFS Business Improvement Programme. b. Restructuring of the UK IFA Businesses i. On 18 March 2005, the Group completed the sale of Chase de Vere Financial Solutions plc and Moneyextra Mortgages Limited to AWD plc, part of AWD Holdings AG. The sale proceeds were €28.4m (£19.4m), which after charging for certain costs and provisions associated with the disposal, has resulted in a net loss on disposal of €20.0m (£13.7m). ii. Provisions released following the exit from leases €8m. (9) Includes: a. Profit of €31m on the sale of the Bank's 50% shareholding in EuroConex Technologies Limited to Nova EuroConex Holdings BV, a subsidiary of US Bancorp, on 29 June, 2004. b. A provision of €117m relating to the Strategic transformation programme. c. Special loan loss release of €100m following a review of the loan loss provisions. 3 INTEREST INCOME Half Year Half Year Year 30-9-2005 30-9-2004 31-3-2005 •m •m •m ______________________________ Loans and advances to banks 202 113 215 Loans and advances to customers 2,164 1,744 3,353 Finance leasing & instalment credit 111 102 212 Available for sale assets 433 229 483 Other 19 - - ______________________________ 2,929 2,188 4,263 ============================== 4 INTEREST EXPENSE Half Year Half Year Year 30-9-2005 30-9-2004 31-3-2005 •m •m •m ______________________________ Interest on subordinated liabilities 124 111 225 Other interest payable 1,730 1,136 2,107 ______________________________ 1,854 1,247 2,332 ============================== 5 OTHER OPERATING INCOME Half Year Half Year Year 30-9-2005 30-9-2004 31-3-2005 •m •m •m ______________________________ Profit on disposal of investment securities 1 1 2 Profit on disposal of motor insurance book - 6 - Other insurance income 49 31 84 Other income 18 25 52 ______________________________ 68 63 138 ============================== 6 TOTAL OPERATING EXPENSES Half year Half year Year 30-9-2005 30-9-2004 31-3-2005 •m •m •m ______________________________ Staff costs 571 545 1,109 Other administrative expenses 320 306 765 Depreciation and amortisation of intangibles 81 81 177 ______________________________ Total operating expenses 972 932 2,051 ============================== 7 EMPLOYEE INFORMATION The average full time equivalents categorised in line with the business classes,are as follows: 30-9-2005 30-9-2004 31-3-2005 _____________________________ Retail Republic of Ireland 7,770 7,835 7,761BOI Life 1,065 1,054 1,051Wholesale Financial Services 1,524 1,441 1,429UK Financial Services 4,125 4,872 4,820Asset Management Services 640 638 634UK Post Office Financial Services 163 108 143Group and Central 1,133 1,121 1,122 _____________________________ 16,420 17,069 16,960 ============================== 8 TAXATION ON PROFIT ON ORDINARY ACTIVITIES Half Year Half Year Year 30-9-2005 30-9-2004 31-3-2005 •m •m •m _____________________________Current Tax Irish Corporation Tax Current year 81 80 169 Prior years 3 - 2Double taxation relief (13) (8) (19)Foreign tax Current year 53 35 75 Prior years - - 3 _____________________________ 124 107 230Deferred TaxOrigination and reversal of temporary 15 14 26differences _____________________________ 139 121 256 ============================== 9 EARNINGS PER UNIT OF €0.64 ORDINARY STOCK The calculation of basic earnings per unit of €0.64 Ordinary Stock is based onthe profit attributable to Ordinary s divided by the weighted average OrdinaryStock in issue excluding Treasury stock and own shares held for the benefit oflife assurance policyholders. Half Year Half Year Year 30-9-2005 30-9-2004 31-3-2005 _____________________________Basic Profit attributable to Ordinary Stockholders €706m €567m €1,047mWeighted average number of shares in issueexcluding Treasury stock and own shares heldfor the benefit of life assurance 946m 942m 942mpolicyholders Basic earnings per share 74.6c 60.2c 111.1c DilutedThe diluted earnings per share is based on the profit attributable toOrdinary Stockholders divided by the weighted average Ordinary Stock inissue excluding Treasury stock and own shares held for the benefit of lifeassurance policyholders adjusted for the effect of all dilutive potentialOrdinary Stock. Half Year Half Year Year 30-9-2005 30-9-2004 31-3-2005 _____________________________ Profit attributable to Ordinary Stockholders €706m €567m €1,047m Weighted average number of shares in issueexcluding Treasury stock and own shares heldfor the benefit of life assurance 946m 942m 942mpolicyholdersEffect of all dilutive potential Ordinary 8m 7m 8mStock _____________________________ 954m 949m 950m =============================Diluted earnings per share 74.0c 59.7c 110.2c 10 LOANS AND ADVANCES TO CUSTOMERS 30-9-2005 1-4-2005 30-9-2004 31-3-2005 •m •m •m •m ________________________________________ Loans and advances to customers 88,256 77,230 69,855 77,076Loans and advances - finance 1,263 1,230 1,594 1,230leasesHire purchase receivables 2,110 1,847 1,727 1,849 ________________________________________ 91,629 80,307 73,176 80,155Provision for impairment (Note (343) (319) (433) (319)11) ________________________________________ 91,286 79,988 72,743 79,836 ======================================== 11 IMPAIRMENT LOSSES ON LOANS AND ADVANCES Half Year Half Year Year 30-9-2005 30-9-2004 31-3-2005 •m •m •m _____________________________ Opening balance 319 472 472Exchange adjustments 2 (8) (9)Charge against profits 50 28 79Amounts written off (40) (71) (144)Recoveries 12 12 21Special release - - (100) _____________________________Closing balance 343 433 319 ============================= All of which relates to loans and advances to customers 12 FINANCIAL INSTRUMENTS 30-9-2005 1-4-2005 •m •m(a) Trading assets ____________________ Loans to banks - - Loans to customers - - Debt securities: ____________________ Government securities 347 912 Other public sector securities - - Other debt securities 271 118 ____________________ Equity instruments 22 - ____________________ 640 1,030 ==================== 30-9-2005 1-4-2005(a) Trading assets ____________________ •m •m(b) Other financial assets at fair value through P/L Loans to banks - - Loans to customers - - Debt securities: ____________________ Government securities 1,873 1,599 Other public sector securities - - Other debt securities 1,711 852 ____________________ Equity instruments 5,693 5,664 ____________________ 9,277 8,115 ==================== 12 FINANCIAL INSTRUMENTS (continued) 30-9-2005 1-4-2005 •m •m ____________________ (c) Available for sale assets Loans to banks - - Loans to customers - - Debt securities: ____________________ Government securities 5,862 5,216 Other public sector securities - - Other debt securities 20,628 15,625 ____________________ Equity instruments 32 - ____________________ 26,522 20,841 ==================== 13 CUSTOMER ACCOUNTS 30-9-2005 1-4-2005 30-9-2004 31-3-2005 •m •m •m •m ______________________________________ Current accounts 14,624 13,422 12,367 13,422Demand deposits 17,531 21,316 21,120 21,316Term deposits and other products 24,528 24,670 22,378 24,785Other short-term borrowings 636 662 686 662 ______________________________________ 57,319 60,070 56,551 60,185 ====================================== 14 SUBORDINATED LIABILITIES 30-9-2005 •m _________ Opening balance 4,086Implementation of IAS32/IAS39 on 1 145April 2005 _________ 4,231 Exchange adjustments 8Issued during period 883Fair value movements 20Amortisation 1 _________Closing balance 5,143 ========= 15 CAPITAL STOCK Half Year Half Year Year 30-9-2005 30-9-2004 31-3-2005 •m •m •m _____________________________ Allotted and fully paidEquity948.0m units of €0.64 of Ordinary Stock 607 603 60477.1m units of €0.64 of Treasury Stock 49 69 52 _____________________________ 656 672 656Other equity interests1.9m units of Non-Cumulative Preference Stock 3 3 3of Stg£1 each3.0m units of Non-Cumulative Preference Stock 4 4 4of €1.27 each _____________________________ 663 679 663 =============================16 RESERVES Half Year Half Year Year 30-9-2005 30-9-2004 31-3-2005 _____________________________ •m •m •m Stock premium account Opening balance 765 767 767 Exchange adjustments 1 (2) (2) _____________________________ Closing balance 766 765 765 ============================= Capital reserve Opening balance 561 503 503 Implementation of IAS32/IAS39 & IFRS4 on 1 (251) - - April 2005 _____________________________ 310 503 503 Exchange adjustments 1 (1) (1) Transfer from retained profit 65 52 43 Reserve on cancellation of stock - - 16 _____________________________ Closing balance 376 554 561 ============================= Retained profit Opening balance 2,336 2,220 2,220 Implementation of IAS32/IAS39 on 1 April (57) - - 2005 _____________________________ 2,279 2,220 2,220 Profit for period 709 576 1,054 Equity dividends (282) (257) (417) Dividends on other equity interests (6) (4) (8) Transfer to capital reserves (65) (52) (43) Minority interest 3 (5) 1 _____________________________ Profit retained 359 258 587 Exchange adjustments 42 (87) (104) Reissue of treasury stock under employee 30 5 7 stock schemes Reissue of treasury stock previously held by - - 1 subsidiary Transfer from revaluation reserve - 6 6 Actuarial losses on pension funds (257) (201) (386) Share based payment reserve 6 5 11 Other (1) 1 (6) _____________________________ Closing balance 2,458 2,207 2,336 ============================= 16 RESERVES (continued) Half Year Half Year Year 30-9-2005 30-9-2004 31-3-2005 _____________________________ •m •m •m Revaluation reserve Opening balance 158 122 122 Exchange adjustments - (1) (1) Transfer to revenue reserve on sale of - (6) (6) property Revaluation of property - - 43 _____________________________ Closing balance 158 115 158 ============================= Available for sale reserve Implementation of IAS32/IAS39 on 1 April 137 - - 2005 Movement during period 59 - - _____________________________ Closing balance 196 - - ============================= Cash flow hedge reserve Implementation of IAS32/IAS39 on 1 April 67 - - 2005 Movement during period (77) - - _____________________________ Closing balance (10) - - ============================= Other equity reserve Implementation of IAS32/IAS39 on 1 April 114 - - 2005 Exchange adjustments 9 - - Movement during period - - - _____________________________ Closing balance 123 - - ============================= 17 AVERAGE BALANCE SHEET AND INTEREST RATES The following tables show the average balances and interest rates of interestearning assets and interest bearing liabilities for each of the half years ended30 September 2005 and 2004 and the year ended 31 March 2005. The calculations ofaverage balances are based on daily, weekly or monthly averages, depending onthe reporting unit. The average balances used are considered to berepresentative of the operations of the Group. Rates for the half years areannualised. Half Year Half Year Year 30-9-2005 30-9-2004 31-3-2005 _______________________ ________________________ ______________________ Average Average Average Balance Interest Rate Balance Interest Rate Balance Interest Rate •m •m % •m •m % •m •m % __________________________________________________________________________ASSETSLoans to banksDomestic 8,227 198 4.8 6,943 91 2.6 6,834 179 2.6officesForeign offices 252 4 3.2 1,107 22 3.9 987 36 3.6Loans to customers(1)Domestic 44,686 1,041 4.7 33,580 783 4.7 35,812 1,664 4.6officesForeign offices 39,035 1,123 5.8 33,625 961 5.7 34,336 1,689 4.9Central governmentand other eligiblebillsDomestic 231 1 0.9 7 - - 7 - -officesForeign offices - - - - - - - - -Debt SecuritiesDomestic 22,709 408 3.6 11,935 201 3.4 13,307 426 3.2officesForeign offices 906 25 5.5 1,171 28 4.9 1,125 57 5.1Finance leases &instalment creditDomestic 1,769 52 5.9 2,984 59 4.0 2,859 120 4.2officesForeign offices 1,548 59 7.6 1,332 43 6.5 1,298 92 7.1Other financialinstruments at fairvalue through P/LDomestic 102 - - - - - - - -Foreign 714 18 5.0 - - - - - -Total interestearning assetsDomestic 77,724 1,700 4.4 55,449 1,134 4.1 58,819 2,389 4.1officesForeign offices 42,455 1,229 5.8 37,235 1,054 5.7 37,746 1,874 5.0 __________________________________________________________________________ 120,179 2,929 4.9 92,684 2,188 4.7 96,565 4,263 4.4Allowance for (443)loan losses (320) (456)Non interest 21,181earning assets 19,349 20,057(2) __________________________________________________________________________ Total assets 139,208 2,929 4.2 112,285 2,188 3.9 117,303 4,263 3.6 ========================================================================== 17 AVERAGE BALANCE SHEET AND INTEREST RATES (continued) Half Year Half Year Year 30-9-2005 30-9-2004 31-3-2005 _______________________ _______________________ ______________________ Average Average Average Balance Interest Rate Balance Interest Rate Balance Interest Rate •m •m % •m •m % •m •m % _____________________________________________________________________LIABILITIES AND STOCKHOLDERS' EQUITYDeposits bybanksDomestic 21,613 370 3.4 18,380 234 2.5 18,882 399 2.1officesForeign offices 1,718 29 3.4 1,212 22 3.6 1,245 38 3.1CustomeraccountsDemand deposits Domestic 12,003 89 1.5 11,153 59 1.1 11,488 79 0.7 offices Foreign 7,161 153 4.3 8,190 158 3.9 7,975 316 4.0 officesTerm and otherdeposits Domestic 14,640 133 1.8 10,793 35 0.6 11,677 129 1.1 offices Foreign 12,486 439 7.0 11,354 373 6.6 11,401 512 4.5 officesInterestbearing currentaccounts Domestic 1,051 3 0.6 926 5 1.1 971 11 1.1 offices Foreign 2,434 41 3.4 2,591 39 3.0 2,553 90 3.5 officesDebt securitiesin issue Domestic 20,017 331 3.3 11,739 115 2.0 13,977 354 2.5 offices Foreign 5,797 142 4.9 4,272 96 4.5 3,769 179 4.7 officesSubordinatedliabilities Domestic 2,544 51 4.0 2,268 59 5.2 2,248 119 5.3 offices Foreign 1,979 73 7.4 1,405 52 7.4 1,442 106 7.3 officesTotal interestbearingliabilities Domestic 71,868 977 2.7 55,259 507 1.8 59,243 1,091 1.8 offices Foreign 31,575 877 5.6 29,024 740 5.1 28,385 1,241 4.4 offices 103,443 1,854 3.6 84,283 1,247 3.0 87,628 2,332 2.7Non interestbearingliabilitiesCurrent 10,133 8,532 8,886accountsOther noninterest 21,249 15,298 16,340bearingliabilitiesStockholders'equityincluding non 4,383 4,172 4,449equity interest _____________________________________________________________________Totalliabilities and 139,208 1,854 2.7 112,285 1,247 2.2 117,303 2,332 2.0stockholders'equity ===================================================================== (1) Loans to customers include non accrual loans and loans classified as problem loans. 18 RATES OF EXCHANGE Principal rates of exchange used in the preparation of the accounts are asfollows: 30-9-2005 30-9-2004 31-3-2005 Closing Average Closing Average Closing Average•/US$ 1.2042 1.2286 1.2409 1.2143 1.2964 1.2647•/Stg£ 0.6820 0.6805 0.6868 0.6723 0.6885 0.6834 19 CAPITAL ADEQUACY DATA 30-9-2005 1-4-2005 31-3-2005 •m •m •m __________________________________________________Adjusted capitalbaseTier 1 6,418 6,020 5,740Tier 2 3,687 2,991 3,313 __________________________________________________ 10,105 9,011 9,053 Supervisory (765) (768) (994)deductions __________________________________________________ 9,340 8,243 8,059 ==================================================Risk weightedassetsBanking Book 84,803 73,251 73,257Trading Book 3,685 2,635 2,635 __________________________________________________ 88,488 75,886 75,892 ================================================== Capital ratiosTier 1 Capital 7.3% 7.9% 7.6%Total Capital 10.6% 10.9% 10.6% 20 THE ACCOUNTS WERE APPROVED BY THE COURT OF DIRECTORS ON 23 NOVEMBER 2005. INDEPENDENT REVIEW REPORT TO THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND Introduction We have been instructed by the Bank to review the financial information for thesix months ended 30 September 2005 set out on pages 16 to 34. We have read theother information contained in the interim statement and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. Directors' responsibilities The interim statement, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim statement in accordance with the ListingRules of the Irish Stock Exchange. As disclosed in note 1, the next annual financial statements of the Bank will beprepared in accordance with accounting standards issued by the InternationalAccounting Standards Board ("accounting standards") and adopted by the EuropeanUnion. This interim statement has been prepared in accordance with the basis ofpreparation and provisional accounting policies included in the TransitionReport, as explained in note 1 to the interim statement. The accounting policies are consistent with those that the directors intend touse in the next annual financial statements. As explained in note 1, there is,however, a possibility that the directors may determine that some changes arenecessary when preparing the full annual financial statements for the first timein accordance with accounting standards issued by the International AccountingStandards Board and adopted by the European Union. The accounting standards andIFRIC interpretations that will be applicable and adopted for use in theEuropean Union at 31 March 2006 are not known with certainty at the time ofpreparing this interim financial information. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the Republic of Ireland. Areview consists principally of making enquiries of Group managementand applying analytical procedures to the financial information and underlyingfinancial data and, based thereon, assessing whether the disclosed accountingpolicies have been applied. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than anaudit and therefore provides a lower level of assurance. Accordingly we do notexpress an audit opinion on the financial information. This report, includingthe conclusion, has been prepared for and only for the Bank for the purpose ofthe Listing Rules of the Irish Stock Exchange and for no other purpose. We donot, in producing this report, accept or assumeresponsibility for any other purpose or to any other person to whom this reportis shown or into whose hands it may come save where expressly agreed by ourprior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2005. PricewaterhouseCoopersChartered AccountantsDublin23 November 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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