BKIR.L Regulatory News (BKIR)

21 Mar 2007 07:01

Bank of Ireland(Governor&Co)21 March 2007 Bank of Ireland Group Trading Statement 21 March 2007 Commenting on the trading statement issued today, Brian Goggin, Group ChiefExecutive, said: "This is a year of significant progress for Bank of Ireland. Our growthstrategies are driving strong performance across the Group. We continue to beatthe objectives of our efficiency programme. We remain confident of delivering anexcellent performance for the year." Introduction Bank of Ireland is issuing the following trading statement ahead of its closeperiod for the year ending 31 March 2007. John O'Donovan, Group Chief Financial Officer, will host a conference call at8.30am GMT today, 21 March 2007. Conference call details are outlined below. Unless otherwise stated, throughout the statement comparative performance ismeasured against the previous financial year (i.e. 12 months to 31 March 2007versus 12 months to 31 March 2006). In September 2006 we announced the formation of the Capital Markets Divisionincorporating our Wholesale Financial Services and Asset Management Servicesoperating divisions. This change took effect from 1 October 2006. This TradingStatement reflects these organisational changes. Re-stated divisional slidescovering the 12 month period to 31 March 2006, and the six month periods toSeptember 2005 and 2006 can be viewed on the Bank of Ireland website at:www.bankofireland.ie/investor. Overview Momentum across the Bank of Ireland Group remains strong and we expect todeliver another excellent performance for the year to 31 March 2007. Our growthand customer strategies continue to drive this performance which is beingfurther enhanced by the successful delivery of our cost programme. The creditenvironment remains exceptionally benign and the economic backdrop to ouractivities, in particular in our main markets in Ireland and the United Kingdom,remains positive. Our capital position has been strengthened during the year andcontinues to support the growth in our business. Bank of Ireland expects underlying EPS for the year to 31 March 2007 to be inline with the current market consensus(1) of 144.4 cent. (1)The market consensus (source: Bank of Ireland Investor Relations 20 March2007) for Bank of Ireland underlying EPS for the year to 31 March 2007 is 144.4cent excluding the impact of non-core items. This compares to an underlying EPSof 118.5 cent for the year to 31 March 2006. Non-core items include gains on disposal of business assets, restructuring costsassociated with the Strategic Transformation Programme, gross-up forpolicyholder tax in the Life business, and hedge ineffectiveness on transitionto IFRS. In the year to 31 March 2006 the total effect of non-core items was again of €206m. Group Excellent business performance across the Group and continuing firm control oncosts is expected to deliver total income and cost growth of circa 12% and 5%respectively. Margin attrition has slowed as previously guided, with mid to highsingle digit basis points attrition expected, arising primarily from: the changein balance sheet structure, product mix and competition. Further progress hasbeen made during the year in improving the Group's efficiency ratio and wecontinue to make excellent progress on the implementation of the StrategicTransformation Programme. We expect to deliver savings in the current financialyear ahead of our cumulative target of €75m. Asset quality across the Groupremains excellent. The annualised loan loss charge as a percentage of averageloans for the year is expected to be high single digit basis points. Our capital position has been enhanced during the year by the successfulimplementation of a range of capital management initiatives. We remain confidentof exceeding our stated target of a 5% equity Tier 1 ratio for March 2007. Retail Ireland The performance of our Retail Division remains strong. Our unrivalleddistribution, the scope of our product range and our commitment to serviceexcellence continue to underpin our leading franchise, despite increasedcompetition. Growth in the residential property market has slowed somewhat inearly 2007 as a result of rising interest rates. Overall, we expect mortgagegrowth in line with the market. Business Banking has performed well with stronglending volume growth expected. Asset quality remains excellent and economicconditions remain supportive of the business. Life Annual Premium Equivalent (APE) sales growth of circa 25% and continuingoperating efficiencies are expected to drive an excellent operating profitperformance from our Life business. PBT performance will be impacted by the markto market of embedded value, and the discount rate reduction in the prior year. Capital Markets We expect Capital Markets to deliver a very strong performance with CorporateBanking a major driver of growth as our international expansion continues. Assetquality remains excellent and our loan loss charge will also be positivelyimpacted by provision write-backs. In Global Markets the performance of ourcustomer business has contributed to a strong performance in what has beenchallenging trading conditions in the rising interest rate environment duringthe year. Our asset management activities have performed as previously guided.We completed the sale of our 90.444% stake in Davy on 31 October 2006. UK Financial Services (UKFS) UKFS continues to perform strongly. Profit momentum in Business Banking isexcellent as we continue to benefit from a period of investment. Growth inlending and resources volumes is strong. The housing market environment in theUK remains strong and while we are seeing increased competition in our mortgagebusiness, our well established position in the specialist segment withcompelling broker propositions is resulting in continuing growth. The margin onour mortgage book in the second half of the year has remained stable as wecontinue to drive growth in our specialist portfolios. Our joint ventures withthe UK post office are performing well and in line with expectation. Assetquality in the Division remains excellent. Preliminary Results Announcement Bank of Ireland Group will announce its Preliminary Results for the year to 31March 2007 on 31 May 2007. Investor Day Bank of Ireland is hosting an Investor Day on 23 March 2007. The event willfocus on the strategy and performance of two of our operating Divisions: RetailFinancial Services Ireland (including our Life business) and Capital Markets. Venue: UBS Investment Bank, 100 Liverpool Street, London EC2M 2RH Time: 10am to 2pm To register for this event please contact Bank of Ireland Investor Relations at:+ 353 (0)1 604 3502. Ends. Contact details: John O'Donovan Group Chief Financial Officer +353 1 632 2054 Geraldine Deighan Head of Group Investor Relations +353 1 604 3501 Frank Ryan Group Financial Controller +353 1 604 3503 Dan Loughrey Head of Group Corporate Communications +353 1 604 3833 Conference call dial-in details: Republic of Ireland free call: 1800 300 213 Republic of Ireland local call: 01 247 5166 UK local call: 0845 245 5000 International: +44 (0) 1452 562 716 Replay facility available until 4th April: 30 minutes after the conference call, a dial-in replay facility will beavailable by dialling: International dial-in: +44 (0) 1452 55 0000 UK free call dial-in: 0800 953 1533 UK local call dial-in: 0845 245 5205 USA free call dial-in: 1866 247 4222 Access number: 7768738# In addition, a recording of the call will be available from 2pm on 21 March 2007on our website: www.bankofireland.ie/investor Forward Looking Statement This statement contains certain forward-looking statements as defined in the USPrivate Securities Litigation Reform Act of 1995 with respect to certain of theGroup's plans and its current goals and expectations relating to its futurefinancial condition and performance and the markets in which it operates.Because such statements are inherently subject to risks and uncertainties,actual results may differ materially from those expressed or implied by suchforward-looking statements. Such risks and uncertainties include but are notlimited to risks and uncertainties relating to profitability targets, prevailinginterest rates, the performance of the Irish and UK economies and theinternational capital markets, the Group's ability to expand certain of itsactivities, competition, the Group's ability to address information technologyissues and the availability of funding sources. The Bank of Ireland Group doesnot undertake to release publicly any revision to these forward-lookingstatements to reflect events, circumstances or unanticipated events occurringafter the date hereof. -------------------------- This information is provided by RNS The company news service from the London Stock Exchange