I was away all day yesterday so I missed all the fun. Share price spiked up and then simmered back down again even though shares traded surpassed the 100mm mark. That indicates one of two things (A) a conflicting news story either directly conflicting with yesterdays news (b) an RNS with neutral to negative tidings. I don't think even external affairs will dampen SP rise however if Draghi decides to introduce European QE. Lets see what happens tomorrow. My own suspicion is that a newspaper or trusted economic expert launches the idea that Irish property market has peaked and will now level off. This is obviously not entirely negative news, yet it would cap the peak to trough theory momentum and as a result it might stagnate estimates temporarily. All this is just the fruit of an overly stimulated mind. I cannot sleep and I tried counting sheep. So in turn I ended up analysing yesterday trade patterns. My conclusions having read the most recent posts re profit guidance is that BKIR will post full year profits in excess of one billion euro as Aclaw stated but not entirely for the reasons indicated. Yes market conditions have immproved and even if the situation levels off this won't change. I think SP will exceed 40 cent even 42 cent, but I am looking forward to seeing what proportion of generated income the UK market yields.
..boi has a p/e of -13.5x with eps of -0.02; earnings could be in the range of + 0.03 & a p/e of say + 10x... That would mean the days are numbered for the current price of the 0.32 ..when p/e kicks in; the valuation is very different; no longer 'book value'...
I have some time this weekend to look over past reports 2013, look over first 1/2 2014, try to make a reasonable estimate ; what you have for the second 1/2 2014 are two variables....net interest margin may be higher than 2.05% ; the second variable are the write offs which are lower than previous estimates..if boi was scheduled to make a profit of 800 to 850mm for full year: a net income; and these 2 variables kick in; that would mean Boi could surpass the 1b net income mark with a high side of 1.35b ; so I will place an estimate for 2014 ; a range of 950mm on the low end and a high range of 1.350b for 2014..divide that with # shares outstanding..1/30 ~ 0.03 to 0.04 share; rough calculation ; if p/e kicks in; valuation goes into multiples..
..these are estimates from Credit Suisse for 2016. BOI is ahead by 2 years if I look at projected results for 2016 from CS. These are the estimates. Total interest income (estimated 2016) 2,666mm , loan provisions (est,) (587), Pre Tax profit (est.) 1,207mm ; Net Income Estimate 2016 - 999mm. -------------------------------------------------------------------------------------------------------------------------------------- these projected results are very similar to actual. In 2013 BOI had total interest income of 2,646mm. 2014 Results are expected to show a net income - higher than 850mm based on 1/2 results for 2014. However, the second 1/2 of 2014 is running ahead of first 1/2 2014; the writeoff are also much less than projected. If BOI were to free 525mm for writeoffs according to the article I posted about RBS; that would imply that adding the 525mm to revenue and the expected net income of say 850mm would push net income at BOI past the 1b mark. 850+ 525 = 1,375b net income for 2014. Much higher than forecasted. Anything over 1b would be a pleasant surprise. AIB also heded in the same direction. Total interest income 2014 also appears to be much higher than that predicted by CS as an estimate for 2016. BOI is ahead of schedule by 2 full years...
..Basing owner-occupier mortgage loan-loss provisions on market values at the end of August would free up 525 million euros ($663 million) at Bank of Ireland Plc and 440 million euros at Allied Irish Banks (ALBK), Davy estimated...
If the national picture is improving then we would have to assume the amount of mortgages boi are writing is growing at a similar pace. Considering how few houses are for sale this will only improve as supply grows over the next couple of years.
Investec: In total, 16,781 mortgages with a value of €3.0bn were approved in the first eight months of the year, which is just shy of the €3.2bn approved in the full year 2013 (18,520 mortgages). On a yearly basis(JanuaryAugust) approvals were up 53.0% , giving a clear indication in the positive momentum in activity. That strength has been concentrated over the summer months, with four of the past five months representing record highs for the series
RBS has released an impromptu trading update this morning indicating that improved economic conditions and asset prices, including in Ireland, has supported a strong performance for its RBS Capital Resolution unit. This business will now record net impairment provision releases of c.£0.5bn in Q3. RCR is also likely to incur limited future impairments and disposal losses and achieve an accelerated timetable to wind-down. RBS also highlights that rising residential house prices in Ireland and debt management has resulted in lower arrears at Ulster Bank, which is now anticipated to record net provision releases of £0.3bn in Q3, with the potential for further release in time, if conditions continue to improve.
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