(Alliance News) - Bank of Ireland Group PLC said Wednesday its trading in the third quarter was in line with management expectations.
"The group continues to deliver against its 2021 strategic targets for loan book growth, transformation and cost reduction together with the ambition to grow its wealth and insurance business," the Irish lender said.
Bank of Ireland said the economic growth in its core markets of Ireland and the UK remained "positive", despite the "ongoing uncertainties" related to the UK's decision to leave the EU.
In the nine months to the end of September, the lender said its net interest income and business income was in line with expectations. In the first half, the lender recorded NII of EUR1.07 billion, which was down slightly on the year before.
Net interest margin at the end of the third quarter came in at 2.15% - in the first half its margin fell to 2.16% from 2.23%. The margin compression over the first nine months of 2019 was blamed on lower interest rates.
"As guided in July, full year NIM is expected to be slightly lower than 2.16%, reflecting the lower interest rate environment. The group continues to maintain strong commercial pricing discipline with loan asset spreads remaining stable," the lender added.
The lender also noted a cost reduction of about 3% in the nine-month period compared to a year before.
Bank of Ireland recorded EUR1.5 billion of net lending growth in the nine-month period, which is EUR800 million higher than in the same period a year ago. The lender attributed the growth to portfolio acquisitions, which was partially offset by non-performing loan securitisations.
Bank of Ireland ended the September 30 with a NPE ratio of 4.7% of gross loans, a 160 basis point reduction compared to the start of 2019.
The bank's loan book ended September at EUR78.0 billion, up from EUR77.0 billion at the beginning of the year. The lender said it will continue to "progress a full range of resolution strategies" regarding its non-performing loans.
"The group's market share of new mortgage lending in Ireland averaged about 23% in the first 8 months of 2019 with strong positive momentum in market share of mortgage applications during the quarter. While SME lending demand has been impacted by Brexit uncertainty, we continue to deliver good year on year growth in both application and drawdown activity," the lender added.
Customer deposits stood at EUR81.8 billion.
Bank of Ireland's fully loaded CET1 ratio ended September at 13.7%, up from 13.6% at the end of June but flat from the end of September.
"The group's organic capital generation during the quarter was partially offset by investments in risk weighted assets associated with new lending, investments in our business transformation programme, an increase in the group's IAS 19 defined benefit pension deficit and a dividend deduction," the bank explained.
Bank of Ireland said it is committed to achieving a return on tangible equity above 10%, but said the interest rate environment, combined with economic uncertainty impacting credit formation, presents "challenges" to achieving this by 2021.
Despite these challenges, the lender said its performance continues to be "positive" and is focused on reducing costs.
Shares in Bank of Ireland were 0.6% lower in London on Wednesday at EUR4.24 each.
By Paul McGowan; paulmcgowan@alliancenews.com
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Bank Of Ireland (BIRG)