Life no easier for Bank of Ireland

Bank of Ireland posted sharply higher underlying losses as bad debts continue to hurt the embattled Irish bank.Underlying losses in the half year to June rose to €1.25bn, up from €668m. Operating profits fell to €553m from €811m as UK-derived profits almost halved to €122m. Total income was 17% lower driven by a significant reduction in net interest income. Net interest margins fell to 1.41% from 1.7%."As expected, the decline in net interest income was largely attributable to competitive pressures on deposit margins, the higher pricing of wholesale funding and the cost of our participation in the Credit Institutions (Eligible Liabilities Guarantee) Scheme," the bank said. Bad debts fell, but only slightly, from €926m to €893m. Mortgage and property and construction impairment charges both increased. The group, which raised €3.4bn in additional capital earlier this year, said losses on loans earmarked to go into NAMA, the Irish state's toxic asset protection scheme, fell to €466m from €551m."The outlook for the remainder of this 2010 financial year remains challenging, in particular the conditions we face in wholesale funding markets," said chief executive Richie Boucher.