BKIR.L Regulatory News (BKIR)

28 Mar 2006 07:01

Bank of Ireland(Governor&Co)28 March 2006 Bank of Ireland Pre-Close Trading Statement 28 March 2006 "Our growth and investment strategies are delivering results in building strongvolume and profit momentum and we will report an excellent performance for theGroup for this year. We look forward with confidence and believe this momentumwill continue next year." Brian J Goggin, Group Chief Executive Introduction Bank of Ireland will be holding briefings with analysts and investors ahead ofits close period for the year to 31 March 2006. This statement sets out theinformation that will be covered in those briefings. John O'Donovan, Group ChiefFinancial Officer, will host a conference call at 8.30 am GMT today, 28 March2006. Conference call details are outlined below. The Pre-Close Trading Statement reflects some organisational changes made tofurther streamline the management and reporting of our activities in the UK: • Post Office Financial Services (POFS) was transferred from Group and Central to our UK Financial Services (UKFS) Division. • First Rate Enterprises Limited (FRE) was transferred from our Wholesale Division. • The principal component of this business, First Rate Travel Services (FRTS), our personal foreign exchange travel service joint venture with the UK Post Office, was transferred to our UKFS Division. • The remaining FRE business was transferred to Retail Republic of Ireland. Restated divisional slides covering the six month periods to 30 September 2004,30 September 2005 and the 12 month period to 31 March 2005 can be viewed on theBank of Ireland website at: www.bankofireland.ie/investor. Comments in this statement are based on expected outturn for the year to 31March 2006 compared to our pro-forma IFRS re-stated results to 31 March 2005 ascontained in our IFRS Transition Documentation released to the market on 27September 2005, and updated where appropriate as set out in the re-stateddivisional slides to reflect the organisational changes as outlined above. Overview Bank of Ireland has continued to make excellent progress in the second half ofthe year to 31 March 2006 and expects to deliver a strong performance for thefull year with our growth and investment strategies delivering results acrossthe Group. We expect to report a strong performance in our Wholesale Divisionand excellent results in the Republic of Ireland from our Retail and LifeDivisions. The performance in our UKFS Division, excluding the impacts of theorganisational changes referred to above and the gain on the disposal of theBristol & West branch network, is expected to be largely in line with last yearas our restructuring and investment programme nears completion and we lookforward to profit growth next year as we continue to build strong volume growth.We have broadened our activities in our Asset Management Division through theacquisition of Guggenheim Alternative Asset Management, a hedge fund of fundsmanager. Our Group Strategic Transformation Programme is ahead of target in thecurrent year. Our capital position is robust and our asset quality remainsexcellent. Group performance is being driven by the excellent execution of strategy againsta backdrop of strongly performing economies. Excluding the effect of non-core items(1) we expect underlying Earnings Per Share(EPS) to grow by circa 15% compared to the pro-forma IFRS underlying EPS at 31March 2005 of 102.3c as contained in our IFRS Transition Documentation. Group We expect total Group income to grow by approximately 7% driven by strong volumegrowth across the Group and partially offset by margin decline of circa 20bps.The drivers of margin attrition as previously advised are balance sheetstructure, the low interest rate environment and its impact on liabilityspreads, product mix and to a lesser extent back-book re-pricing of our UKmortgage book which is now complete together with the impact in the currentfiscal year of the sale of the Bristol & West deposit book. Cost growth is well contained and we expect an increase of circa 3% for theyear. Asset quality remains excellent in the continuing benign environment andwe expect a basis points loan loss charge for the year similar to that in thefirst half of the year. Retail Republic of Ireland Retail Republic of Ireland has performed strongly. We continue to build strengthat the front-line through our Customer Programme "Changing for You" and supportthis with efficiencies and cost savings that are being delivered by theStrategic Transformation Programme. Profit growth of circa 18% is expected withstrong growth in loans and resources. Bank of Ireland Life Bank of Ireland Life is expected to deliver very strong results for the yearwith PBT growth in excess of 60% and operating profit(2) growth of circa 40%. This operating performance is being driven by excellent new business volume,improving operational efficiency and tight cost control. Wholesale Financial Services Profit growth for the Division of circa 15% is expected, driven by the excellentperformance of our Corporate Banking business. We have continued to grow ourdomestic franchise and to invest in our international corporate bankingactivities with the opening of offices in Paris and Frankfurt together with thestrengthening of our teams in the UK and the US. Asset quality remains excellentin the continuing benign credit environment. The other businesses in theDivision, Global Markets, Davy and IBI Corporate Finance, continued to performwell during the year. UK Financial Services The UKFS Division now comprises: Mortgages; Business Banking; and ConsumerFinancial Services, the latter representing a grouping of all our businesseswith the UK Post Office, i.e. our 50% share of FRTS and POFS. Including theimpact of the transfer of these businesses into the Division and excluding thegain on the disposal of the Bristol & West branch network (£124m), we expect aprofit increase of circa 5% for the year. Excluding the impact of these twofactors, we expect profit to be in line with last year. Asset Management Division Fund outflows from BIAM continued, but at a slower pace, with funds undermanagement at the year-end expected to be in the order of €45bn compared to€44bn on 30 September 2005 and €46.9bn on 31 March 2005. The other businesses inthe division continued to perform well. We expect profit from the AssetManagement Division to be down by circa 30% over the period in line withguidance. On 31 January 2006 we acquired 71.5% of Guggenheim Alternative AssetManagement. Strategic Transformation Programme The benefits from the Strategic Transformation Programme are gaining momentumand we expect to deliver cost savings in the current year ahead of target. Ends. Contact details: John O'Donovan Group Chief Financial Officer +353 1 632 2054Geraldine Deighan Head of Group Investor Relations +353 1 604 3501Frank Ryan Group Financial Controller +353 1 604 3503Dan Loughrey Head of Group Corporate Communications +353 1 604 3833 Conference Call Dial-in Details: Republic of Ireland: (01) 247 5166International: + 44 (0) 1452 560 210 Replay facility: 30 minutes after the conference call, a dial-in replay facility will beavailable by dialling:Tel: +44 (0) 1452 55 00 00Access number: 6358090#This facility will be available until 4th April 2006. In addition, a recording of the call will be available at noon on 28 March 2006on 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. -------(1) Non-core items include in the year to 31 March 2006 a gain on the disposal of the Bristol & West branch network, restructuring costs associated with theStrategic Transformation Programme and hedge ineffectiveness on transitionto IFRS. In the year to 31 March 2005 the cumulative effect of non-core items was a loss of €12m which related to the disposal of businesses, restructuring costs, and the special release from the general loan impairment provision. (2) Operating profit excludes the effect of a 50bps reduction in the discount rate applied to embedded value together with the effect of the mark to market of the embedded value of in-force assets in the Life business. This information is provided by RNS The company news service from the London Stock Exchange