19th Sep 2006 07:01
Bank of Ireland(Governor&Co)19 September 2006 Bank of Ireland Group Trading Statement 19 September 2006 Commenting on the trading statement issued today, Brian Goggin, Group ChiefExecutive, said: "The momentum across our business portfolios is very strong and we expect todeliver an excellent Group performance for the half-year. Our investment andgrowth strategies are now delivering results, and we are particularly pleasedwith the anticipated strong profit growth in our UKFS Division. Whilst drivinggrowth, our focus on cost management is relentless. The outlook for the Group ispositive and we remain confident of delivering a strong performance this year." Introduction Bank of Ireland is issuing the following trading statement ahead of its closeperiod for the half-year ending 30 September 2006. Unless otherwise stated,throughout the statement comparative performance is measured against the firsthalf of our previous financial year (i.e. 6 months to 30 September 2006 versus 6months to 30 September 2005). We recently announced the formation of the Capital Markets Divisionincorporating our Wholesale Financial Services and Asset Management Servicesoperating divisions. This change takes effect from 1 October 2006 and does notimpact on the reporting of the Group's performance in the first half of thisfinancial year. John O'Donovan, Group Chief Financial Officer, will host a conference call at8.00am BST today, 19 September 2006. Conference call details are outlined below. Overview Bank of Ireland has made excellent progress in the half-year to 30 September2006 building on the momentum developed last year. We continue to deliversuccessfully on our growth strategies across the Group and to exceed theobjectives of our efficiency programme in the current year. We expectparticularly strong performances from our Retail, Life, Wholesale and UKFinancial Services Divisions. The economic backdrop to our business activitiescontinues to be positive and the credit environment exceptionally benign. Ourcapital management strategy continues to support the growth in our business. Excluding the effect of non-core(1) items, and having benefited from some loanloss provision write-backs during the period, we expect to grow underlyingEarnings Per Share (EPS) by circa 25% for the half-year to 30 September 2006 onan underlying EPS of 57.3c for the half-year to 30 September 2005. Followingthis robust first half expected performance we are now revising our EPS guidancefor the full year. We expect to deliver high teens percentage EPS growth for thefull year to 31 March 2007 on an underlying EPS of 118.5c for the full year to31 March 2006. Retail Ireland Business momentum within our Retail Division in Ireland continues to be verystrong and we expect to deliver excellent profit before tax (PBT) growth ofcirca 25% with strong increases in both loans and resources. Customer responseto our product and service initiatives in both retail and business banking isvery positive. Strong revenue growth, combined with further significantefficiency gains are expected to result in an excellent cost/income performanceduring the period. Life Bank of Ireland Life continues to perform strongly with excellent sales growth(Annual Premium Equivalent) of circa 25%, and effective cost-control, the maindrivers of performance. We expect to deliver very strong operating profit growthof circa 20% in the period. PBT will be circa 6% lower as it is impacted by thenegative mark to market of embedded value (EV) in the current year due to weakerstock markets, with the EV in the prior period having benefited from a reductionin the discount rate. Wholesale Financial Services (WFS) The performance of our WFS Division has been very strong with PBT growth ofcirca 45% expected. The businesses across the Division are expected to deliverstrong results with Corporate Banking a particular highlight. The investment inexpanding our Corporate Banking franchise is delivering excellent results withstrong loan growth across our portfolios and significant arrangement fees beingearned. Loan losses have benefited from provision write-backs during the periodand from the continuing exceptionally benign credit environment. UK Financial Services (UKFS) UKFS has performed particularly strongly and we expect to deliver PBT growth ofcirca 30%. The benefits of our investment in Business Banking are a key driverof this performance. We have achieved excellent loan and resource growth acrossour portfolios. Our Mortgage business continues to deliver strong growth byleveraging the strength of our position in specialist lending. Trading in ourjoint venture with the UK Post Office is progressing well. Asset Management Services (AMS) We have made good progress in the integration of our newly acquired businesses,Guggenheim Advisors and our joint venture with Paul Capital, in the first halfof this year. We expect PBT from the AMS Division to be down circa 31% comparedto the same period last year. Our full year guidance for the Division of highteens percentage PBT decline remains unchanged. Group Risk weighted asset growth of circa 22% in the 12 month period from 30 September2005 to 30 September 2006 is expected. We expect low to mid-teens basis pointsmargin attrition for the half-year to 30 September 2006 compared to thehalf-year to 30 September 2005. Drivers of this attrition are as expected:change in balance sheet structure, product mix and competition. Excellentbusiness performance across the Group is expected to deliver total income growthof circa 12%. Cost growth is firmly managed and we expect an increase of circa5%. We continue to make excellent progress on the implementation of theStrategic Transformation Programme and are confident of delivering savings inthe current financial year ahead of our cumulative target of €75m. Furtherprogress has been made in improving the Group efficiency ratio. Asset qualityacross the Group remains excellent. The annualised loan loss charge as apercentage of average loans for the half-year is expected to be circa 9bps. Our capital strategy continues to support our planned growth through acombination of internally generated capital together with various capitalmanagement initiatives. We expect our Total Capital Ratio and Tier 1 CapitalRatio to remain strong at circa 10.9% and 7.7% respectively at the half-yearend. Interim Results Announcement Bank of Ireland Group will announce its Interim Results for the half-year to 30September 2006 on Thursday 16 November 2006. Ends. Contact details:John O'Donovan Group Chief Financial Officer +353 1 632 2054Geraldine Deighan Head of Group Investor Relations +353 1 604 3501Frank Ryan Group Financial Controller +353 1 604 3503Dan Loughrey Head of Group Corporate Communications +353 1 604 3833 Conference Call Dial-in Details:Republic of Ireland: (01) 247 5166International: + 44 (0) 1452 560 210 Replay facility:30 minutes after the conference call, a dial-in replay facility will beavailable by dialling:Tel: +44 (0) 1452 55 00 00Access number: 5264690#This facility will be available until 26 September 2006 In addition, a recording of the call will be available from 2pm on 19 September2006 on our website: www.bankofireland.ie/investor Forward Looking Statement This statement 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 UK economies and theinternational capital markets, the Group's ability to expand certain of itsactivities, competition, the Group's ability to address information technologyissues and the availability of funding sources. The Bank of Ireland Group doesnot undertake to release publicly any revision to these forward-lookingstatements to reflect events, circumstances or unanticipated events occurringafter the date hereof. --------------------------(1) Non-core items in the half-year to 30 September 2006 include a gain on thedisposal of assets, restructuring costs associated with the StrategicTransformation Programme, Life policyholder tax and hedge ineffectiveness ontransition to IFRS. In the half-year to 30 September 2005 the total effect ofnon-core items was a gain of €183m which related to the disposal of the Bristol& West branch network, restructuring costs, Life policyholder tax and hedgeineffectiveness on the transition to IFRS. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BKIR.L