Bank of Ireland posts loss of €669m for the first half of 2020

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The Bank of Ireland group published their half year results for the first half of 2020 today. The Bank of Ireland group stated in their report that they would have a loss of €669 million as a result of setting €937 million aside for impairment charges. This large change was taken as a result of Stage 1 and 2 performing loans. Breaking down this loss reveals that there was an €184 million adjustment to account for payment breaks, €321 million adjustment to account for loan loss, and €432 million from the impact the impairment charges will have impairment models according to the bank’s financial outlooks. The amount of impairment coverage increased from 1.6% to 2.7% in December 2019. This percent change is what lead to an impairment loss allowance of €2.1 billion on their balance sheets as of June 2020.

The loan book of the bank decreased by €2.8 billion during the first half of 2020. Using a constant currency basis, the bank’s loan book decreased by €0.5 billion. The bank also had a net lending growth amounting to €0.2 billion, which includes revolving credit facility (RCF_ drawdowns totaling €1.3 billion. The bank’s mortgage market share did increase in Ireland to 25%. The amount of net lending the bank engaged in during the first half of 2020 was unfortunately offset by foreign exchange as well as other movements of €2.1 billion in addition to the costs incurred by impairment charges. Excluding RCF activity, the total new lending volumes (€5.8 billion) were 19% lower than in the first half of 2019. These changes reflect the significantly reduced activity in fundamental financial markets as a result of COVID-19.

The net interest income of the bank amounted to €1.1 billion, which was in line with the results obtained from 2019. The net interest margin for the first half of 2020 was 2.02%. The bank’s net interest income shows the long-term benefits of loan book growth that the group engaged in since 2017.

The fees as well as other income come as a result of a wide array of business activities such as wealth, Forex, and transactional banking fees. The income that results from fees and other income includes business income of €266 million. The amount of business income the bank obtained from the first half of 2020 was 14% below then the same time period back in 2019 as a result of COVID-19. The income amount from wealth and insurance decreased by 16% as opposed to the same time period in 2019 as a result of lower new business sales and reduced income from existing businesses.

This article was written by Ian, an intern at Irish Mortgage Brokers and from the USA.


Bank of Ireland posts underlying loss of €669m for H1 2020