IMS - Trading in line with expectations
RNS Number : 5147FBank of Ireland(Governor&Co)25 April 2014 The Governor and Company of the Bank of Ireland (The "Group")Interim Management StatementTrading in line with expectations - profitable and generating capital 25 April 2014 Trading The Group is trading in line with its expectations for 2014. We have been profitable and generating capital since the start of the year. The macroeconomic environment and outlook in Ireland and the UK, which are our key markets, are continuing to improve in 2014. The Group's net interest margin (NIM) has developed as we anticipated in the first quarter and a NIM of approximately 205 bps was achieved in this period. Fees relating to the exceptional Eligible Liabilities Guarantee Scheme continue to reduce in line with expectations. We are achieving higher margins on new lending and are actively seeking new lending opportunities of the appropriate credit quality and at appropriate levels of return. We have the capital, liquidity and infrastructure available to support our growth objectives in our core businesses. Fees and other income are broadly similar to the levels earned in the second half of 2013. The Group remains focused on tight cost control. We continue to consolidate, standardise and simplify our operations whilst investing in our people, businesses and infrastructure. Asset quality Asset quality trends continue to improve in line with our expectations, reflecting the improving economic conditions and the Group's actions to appropriately and sustainably work with those customers who are in financial difficulty. As anticipated, defaulted loan volumes are continuing to decline, with Group defaulted volumes at the end of March 2014 being below the levels at 31 December 2013. Total arrears in our Irish mortgage book have continued to fall in the first quarter of 2014, with reductions in both early and default arrears. On 28 February 2014, NAMA announced that it would, for the first time, pay a coupon on its subordinated debt. As a consequence, the Group has increased the carrying value of its NAMA subordinated debt to c.70% of its nominal value, which reverses part of the impairment charges taken in previous years on this asset. Balance sheet The Group's loan volumes were c. €83.3 billion at the end of March 2014 compared to c.€84.5 billion at 31 December 2013, as repayments continued to exceed new lending. In Ireland, we continue to identify and convert new lending opportunities as the economy recovers and as the banking market consolidates. Customer Deposits were c.€74 billion at the end of March 2014, giving rise to a loan to deposit ratio of 112%. Wholesale funding was c.€25 billion at the end of March 2014, of which €7.6 billion was Monetary Authority Funding including €3.4 billion related to NAMA bonds. The Group has successfully accessed international capital markets including the issuance in January 2014 of a 5 year senior unsecured bond, followed by a 5 year asset covered security (ACS) in March 2014, backed by Irish mortgage collateral. The cost of these issuances has continued to fall compared to similar issuance in 2013. The Group's Common Equity Tier 1 ratio (Basel III transitional basis) at the end of March 2014 was higher than the pro-forma level of 12.3% reported at 1 January 2014, primarily reflecting a reduction in risk weighted assets and the profits generated by the Group during the period. EndsFor further information please contact:
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