Bank of Ireland CEO to Stay After Surgery, Profit Return

Aug. 1 (Bloomberg) -- Bank of Ireland Plc Chief Executive Officer Richie Boucher said he will return after cancer surgery this month, as the lender returned to profit.

Bank of Ireland reported net income of 343 million euros ($459 million) in the first half, the first profit since 2011, from a 463 million-euro loss a year earlier as loan losses fell and interest income rose, the lender said in a statement today.

“I’m seeing momentum in the business,” Boucher, 55, told reporters in Dublin. “I certainly envisage myself as continuing to be part of that. I’m enjoying it. We’re now back in a growth phase.”

Since taking over five years ago at Bank of Ireland, which received a 4.8 billion-euro bailout during the financial crisis, Boucher has shrunk the lender’s balance sheet, cut jobs and returned 6 billion euros to taxpayers. Boucher joked that he’ll “be back annoying everyone soon” after revealing last month he will be taking leave of absence in August while he has an early-stage cancerous growth in his colon removed.

“My doctors have advised that the cancerous issue appears not to have spread beyond where it was identified,” Boucher said after reporting first-half earnings.

The bank reported a net income in 2011 as a result of booking gains from buying back bonds at a discount to par.

The bank’s loan loss charge declined 43 percent to 444 million euros as Ireland’s economy showed signs of recovery after its worst recession on record. Net interest income increased 20 percent to 1.16 billion euros, after the bank raised borrowing costs for some loans.

House Prices

The Irish central bank this week raised its 2014 gross domestic growth forecast for the country to 2.5 percent from 2 percent as employment rises and house prices rebound from western Europe’s worst real-estate collapse.

Bank of Ireland’s loans in default fell by 400 million euros to 16.7 billion euros in the first half, following a 1.2 percent decline in the second six months of last year.

The lender’s owner-occupier mortgages more than 90 days behind in payments fell to 9.5 percent at the end of June from 10.1 percent in December. Buy-to-let arrears rose to 29.4 percent from 27.7 percent, the bank said.

Bank of Ireland’s net loans fell by 1.1 billion euros during the first half to 83.4 billion euros. The bank said it’s confident that “over time we can grow our loan book to our target level.” The lender previously said its target portfolio is 90 billion euros.

Loan Growth

“Although loan growth continues to disappoint, we are hopeful that an inflection point beckons as the pace of decline slows and the Irish economy continues to strongly recover,” said Ciaran Callaghan, an analyst with Merrion Capital in Dublin.

The bank was unchanged at 26.5 euro cents as of 10:19 a.m in Dublin trading, giving it a market value of 8.6 billion euros.

The bank’s core equity Tier 1 ratio, a gauge of financial strength, rose to 13.2 percent at the end of June from 12.3 percent at the end of last year. The ratio was helped by 1.3 billion euros of preferred stock, issued by the lender in 2009, which the bank plans to redeem in the first half of 2016.

The bank’s larger-than-expected increase in its capital reserves are a “stand-out feature of a solid first half,” said Emer Lyons, an analyst with Dublin-based securities firm Davy, who has an outperform rating on the stock.

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To contact the editors responsible for this story: Simone Meier at Dara Doyle, Edward Evans