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UPDATE 1-Bank of Ireland's 'green shoots' lift shares despite loss

Wed, 5th Aug 2020 09:33

(Adds share price rise, UK restructuring)

By Padraic Halpin

DUBLIN, Aug 5 (Reuters) - Bank of Ireland's shares
rose by 10% on Wednesday as some signs of recovery from the
coronavirus crisis outweighed a first-half pre-tax loss of 669
million euros ($790 million).

Ireland's largest bank by assets put aside 937 million euros
mainly to cover likely losses from 105,000 loan repayment breaks
for customers hit by the crisis, making up the bulk of a
"prudent" 1.1-1.3 billion euro charge expected during 2020.

Davy Stockbrokers analysts said that although the
impairments were much higher than forecast they appeared to be
front-loaded and pointed to a 2020 income outlook that was
better than indicated in the first quarter.

"We're cautiously optimistic that we're beginning to see
green shoots," Chief Financial Officer Myles O'Grady told
Reuters by telephone, pointing to a 25% year-on-year jump in
Irish mortgage applications in July and a 6% month-on-month rise
in business loan volumes.

"It's all premised on there not being another lockdown but
it does seem like things are picking up for a recovery as we get
towards the end of the year and into 2021."

The bank's shares were 10.5% higher at 0800 GMT, versus a
1.1% rise in the wider market. Allied Irish Banks
rose 3.7% ahead of its interim results on Thursday.

Bank of Ireland put 63,000 payment breaks in place in the
United Kingdom, where it is the biggest Irish lender and where
it announced further restructuring to shrink its balance sheet.

Most UK breaks were for smaller consumer loans and O'Grady
said 33% of impacted mortgage customers had extended the initial
three-month holiday.

In Ireland, 54% of affected mortgage customers sought to
extend the break to six months. Smaller rivals permanent tsb
and NatWest Group's Ulster Bank have reported a
similar level.

The bank, which made a pretax profit of 376 million euros
in the same period last year, said its core Tier 1 capital
ratio, a key measure of financial strength, rose to 13.6% from
13.5% at the end of March, above the minimum requirement of
9.27%.

It also cut costs by 3% year-on-year and announced a
voluntary redundancy programme for staff.
($1 = 0.8472 euros)
(Reporting by Padraic Halpin; Editing by Alexander Smith)

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