Bank of Ireland CEO Says Arrears Stabilize as 2012 Loss Widens

Bank of Ireland Plc Chief Executive Officer Richie Boucher said mortgage arrears are stabilizing as the nation’s largest bank by assets had a wider full-year loss.

The pretax loss widened to 2.2 billion euros ($2.8 billion) from 190 million euros a year earlier, as one-time gains from buying back junior bonds at a discount to par value in 2011 wasn’t repeated, the Dublin-based bank said in a statement today. Excluding one-time items, pretax losses narrowed to 1.49 billion euros from 1.52 billion euros.

Boucher, 54, said he cut his workforce 9 percent to about 12,000 last year as he continued to shrink the bank’s loan book and reliance on central bank funding. While the net interest margin, the difference between the rate at which it borrows and lends to customers, rebounded in the second half, he reiterated that the goal of raising it to more than 2 percentage points by end-2014 is challenging as interest rates remain low.

“There are definitely signs that the economy is starting to grow again,” Boucher told reporters in Dublin after the results. “There are definite signs in the bank that all the work we’ve been putting in over the last four years is starting to come through in financial numbers.”

‘Impairment Charges’

The net-interest margin widened to 1.34 percent in the second half from 1.20 percent in the previous six months, as the bank cut deposit rates and raised borrowing costs. Deposits grew to 75 billion euros at end-December from a year earlier, while central bank reliance fell to 12 billion euros from 23 billion euros, Boucher said.

Bank of Ireland’s loan loss charge fell to 1.72 billion euros form 1.94 billion euros a year earlier, marking a third straight year of decline.

“The impairment charges will continue to reduce from this elevated level as the Irish economy recovers,” said Andrew Keating, chief financial officer.

By value, 9.9 percent of the bank’s Irish owner-occupier mortgages were at least 90 behind in payments at the end of December, up from 9.2 percent in June and 7.40 percent a year earlier. Buy-to-let arrears rose to 23.4 percent in December from 20.8 percent in June and 16.8 percent a year earlier.

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