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* Bank returned to profit in second half
* Cost target hit a year before schedule, sets fresh goal
* Irish branch network to be cut to 169 from 257
(Adds union comment on branch closures, share price, dividend)
By Padraic Halpin
DUBLIN, Feb 28 (Reuters) - Bank of Ireland limited
its underlying 2020 loss to 374 million euros ($452 million)
after a return to profitability in the second half, the bank
said on Monday, sending its shares more than 5% higher.
Ireland's largest bank by assets also announced the closure
of one-third of its branches in Ireland, 10 days after NatWest
said it would wind down its Irish arm Ulster Bank.
The bank set aside 1.1 billion euros to cover possible loan
defaults due to COVID-19 disruption, the bottom of its forecast
range and which it expects to capture the majority of credit
impairment risk associated with the pandemic.
An underlying 295 million euros second half profit limited
the damage as lending and business income improved, trends Chief
Financial Officer Myles O'Grady said continued into 2021, even
though Ireland was in a long lockdown again.
"It's clear that there is some impact from this lockdown but
the signals overall are encouraging. We do think (the second
half) will be a return to a more normalised level of activity,"
O'Grady told Reuters.
Shares in the bank were 5.1% higher at 3.6 euros by 0910
GMT.
The bank cut it costs by 4% year on year in 2020, meaning it
achieved its 1.7 billion euro annual cost target one year early.
It set a new goal of cutting costs further to 1.5 billion euros
by 2023.
That will partly be achieved by branch closures, with its
Irish network cut to 169 from 257 from September and Northern
Irish presence more than halved to 13. It struck a deal with the
Irish post office to offer customers access to banking services
at An Post locations.
The head of Ireland's Finance Services Union described the
announcement of closures in the middle of a pandemic as a
"shameful act" that needed to be reversed.
Bank of Ireland's core Tier 1 capital ratio, a key measure
of financial strength, stood at 13.4% versus 13.5% at the end of
September. The bank said it expected capital to remain broadly
in line with those levels in 2021.
The bank's guidance for this year should support the restart
of distributions to shareholders in relation to full-year 2021
results, Chief Executive Francesca McDonagh said, adding that
future distributions will likely include share buybacks.
($1 = 0.8272 euros)
(Reporting by Padraic Halpin; Editing by Edmund Blair)
