Bank of Ireland(Governor&Co)
21 March 2007
Bank of Ireland Group Trading Statement
21 March 2007
Commenting on the trading statement issued today, Brian Goggin, Group Chief
Executive, said:
'This is a year of significant progress for Bank of Ireland. Our growth
strategies are driving strong performance across the Group. We continue to beat
the objectives of our efficiency programme. We remain confident of delivering an
excellent performance for the year.'
Introduction
Bank of Ireland is issuing the following trading statement ahead of its close
period for the year ending 31 March 2007.
John O'Donovan, Group Chief Financial Officer, will host a conference call at
8.30am GMT today, 21 March 2007. Conference call details are outlined below.
Unless otherwise stated, throughout the statement comparative performance is
measured against the previous financial year (i.e. 12 months to 31 March 2007
versus 12 months to 31 March 2006).
In September 2006 we announced the formation of the Capital Markets Division
incorporating our Wholesale Financial Services and Asset Management Services
operating divisions. This change took effect from 1 October 2006. This Trading
Statement reflects these organisational changes. Re-stated divisional slides
covering the 12 month period to 31 March 2006, and the six month periods to
September 2005 and 2006 can be viewed on the Bank of Ireland website at:
www.bankofireland.ie/investor.
Overview
Momentum across the Bank of Ireland Group remains strong and we expect to
deliver another excellent performance for the year to 31 March 2007. Our growth
and customer strategies continue to drive this performance which is being
further enhanced by the successful delivery of our cost programme. The credit
environment remains exceptionally benign and the economic backdrop to our
activities, in particular in our main markets in Ireland and the United Kingdom,
remains positive. Our capital position has been strengthened during the year and
continues to support the growth in our business.
Bank of Ireland expects underlying EPS for the year to 31 March 2007 to be in
line with the current market consensus(1) of 144.4 cent.
(1)The market consensus (source: Bank of Ireland Investor Relations 20 March
2007) for Bank of Ireland underlying EPS for the year to 31 March 2007 is 144.4
cent excluding the impact of non-core items. This compares to an underlying EPS
of 118.5 cent for the year to 31 March 2006.
Non-core items include gains on disposal of business assets, restructuring costs
associated with the Strategic Transformation Programme, gross-up for
policyholder tax in the Life business, and hedge ineffectiveness on transition
to IFRS. In the year to 31 March 2006 the total effect of non-core items was a
gain of €206m.
Group
Excellent business performance across the Group and continuing firm control on
costs is expected to deliver total income and cost growth of circa 12% and 5%
respectively. Margin attrition has slowed as previously guided, with mid to high
single digit basis points attrition expected, arising primarily from: the change
in balance sheet structure, product mix and competition. Further progress has
been made during the year in improving the Group's efficiency ratio and we
continue to make excellent progress on the implementation of the Strategic
Transformation Programme. We expect to deliver savings in the current financial
year ahead of our cumulative target of €75m. Asset quality across the Group
remains excellent. The annualised loan loss charge as a percentage of average
loans for the year is expected to be high single digit basis points.
Our capital position has been enhanced during the year by the successful
implementation of a range of capital management initiatives. We remain confident
of exceeding our stated target of a 5% equity Tier 1 ratio for March 2007.
Retail Ireland
The performance of our Retail Division remains strong. Our unrivalled
distribution, the scope of our product range and our commitment to service
excellence continue to underpin our leading franchise, despite increased
competition. Growth in the residential property market has slowed somewhat in
early 2007 as a result of rising interest rates. Overall, we expect mortgage
growth in line with the market. Business Banking has performed well with strong
lending volume growth expected. Asset quality remains excellent and economic
conditions remain supportive of the business.
Life
Annual Premium Equivalent (APE) sales growth of circa 25% and continuing
operating efficiencies are expected to drive an excellent operating profit
performance from our Life business. PBT performance will be impacted by the mark
to market of embedded value, and the discount rate reduction in the prior year.
Capital Markets
We expect Capital Markets to deliver a very strong performance with Corporate
Banking a major driver of growth as our international expansion continues. Asset
quality remains excellent and our loan loss charge will also be positively
impacted by provision write-backs. In Global Markets the performance of our
customer business has contributed to a strong performance in what has been
challenging trading conditions in the rising interest rate environment during
the year. Our asset management activities have performed as previously guided.
We completed the sale of our 90.444% stake in Davy on 31 October 2006.
UK Financial Services (UKFS)
UKFS continues to perform strongly. Profit momentum in Business Banking is
excellent as we continue to benefit from a period of investment. Growth in
lending and resources volumes is strong. The housing market environment in the
UK remains strong and while we are seeing increased competition in our mortgage
business, our well established position in the specialist segment with
compelling broker propositions is resulting in continuing growth. The margin on
our mortgage book in the second half of the year has remained stable as we
continue to drive growth in our specialist portfolios. Our joint ventures with
the UK post office are performing well and in line with expectation. Asset
quality in the Division remains excellent.
Preliminary Results Announcement
Bank of Ireland Group will announce its Preliminary Results for the year to 31
March 2007 on 31 May 2007.
Investor Day
Bank of Ireland is hosting an Investor Day on 23 March 2007. The event will
focus on the strategy and performance of two of our operating Divisions: Retail
Financial Services Ireland (including our Life business) and Capital Markets.
Venue: UBS Investment Bank, 100 Liverpool Street, London EC2M 2RH
Time: 10am to 2pm
To register for this event please contact Bank of Ireland Investor Relations at:
+ 353 (0)1 604 3502.
Ends.
Contact details:
John O'Donovan Group Chief Financial Officer +353 1 632 2054
Geraldine Deighan Head of Group Investor Relations +353 1 604 3501
Frank Ryan Group Financial Controller +353 1 604 3503
Dan Loughrey Head of Group Corporate Communications +353 1 604 3833
Conference call dial-in details:
Republic of Ireland free call: 1800 300 213
Republic of Ireland local call: 01 247 5166
UK local call: 0845 245 5000
International: +44 (0) 1452 562 716
Replay facility available until 4th April:
30 minutes after the conference call, a dial-in replay facility will be
available by dialling:
International dial-in: +44 (0) 1452 55 0000
UK free call dial-in: 0800 953 1533
UK local call dial-in: 0845 245 5205
USA free call dial-in: 1866 247 4222
Access number: 7768738#
In addition, a recording of the call will be available from 2pm on 21 March 2007
on our website: www.bankofireland.ie/investor
Forward Looking Statement
This statement contains certain forward-looking statements as defined in the US
Private Securities Litigation Reform Act of 1995 with respect to certain of the
Group's plans and its current goals and expectations relating to its future
financial 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 such
forward-looking statements. Such risks and uncertainties include but are not
limited to risks and uncertainties relating to profitability targets, prevailing
interest rates, the performance of the Irish and UK economies and the
international capital markets, the Group's ability to expand certain of its
activities, competition, the Group's ability to address information technology
issues and the availability of funding sources. The Bank of Ireland 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.
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