BoI back on the acquisition trail for loans and asset managers

Bank of Ireland is in the running to buy Danske Bank's €2bn Irish loan book, the bank's retail head indicated strongly yesterday.

The bank will also look to acquire wealth management businesses to boost its private banking arm.

Bank of Ireland yesterday announced a €480m profit in the first half of the year, €70m of which has been earmarked for a dividend to be paid next year, the first since the crash.

The bank said the €3.4bn of loans it made in Ireland in the first half of the year makes it the largest lender here.

Bank of Ireland's lending is "probably 20pc" ahead of nearest rival AIB, according to Liam McLoughlin, head of the bank's retail Ireland division.

Residential mortgage lending in Ireland grew by over 30pc in the first half of 2017, taking the bank's share of new lending to 26pc. New corporate lending was up €1.9bn in the period.

The bank is highly capitalised, and the lack of new housing supply means the ability to grow its Irish mortgage lending arm is constrained.

At a press conference yesterday Liam McLoughlin said the bank would look at buying loan portfolios from other lenders as an alternative source of growth.

Bank of Ireland has bought seven "books", or portfolios, of mortgages and loans over the past three years, and will continue to "be in the market for good quality performing assets as opportunities emerge", he said.

And he indicated that includes bidding for €2bn of Irish residential and buy-to-let mortgages currently being sold by Danske Bank, as it completes its exit from retail banking here.

"That (Danske Bank's portfolio) is a very interesting opportunity in the market place," Liam McLoughlin said.

The bank is not looking to offload any of its own distressed assets, he said.

The bank also expects to do some "opportunistic" acquisitions to bolster its €4bn private banking arm, with an eye to wealth management rather than asset management assets.

The bank bought Covestone Asset Management last year in a €100m deal, and has since restructured its private bank, bringing it more closely into the main banking business.

In a growing economy, the private bank, which generates fee income advising wealthy clients with at least €500,000 in income or assets, is expected to be increasingly important, Liam McLoughlin said.

Bank of Ireland said its pension deficit stabilised at €490m at the end of June.

The bank delayed paying a dividend this year, over fears that interest rate moves would create a need to retain capital against the pension.

Bank of Ireland CFO Andrew Keating said shareholders raise the pension issue at the majority of meetings with management, but that it is becoming less exposed to potential volatility while employees and former staff who are members of the scheme can be "very confident about the financial strength of the scheme".

The bank reported an underlying first-half pre-tax profit of €480m versus €560m a year ago.

Costs were flat in the period, the bank said in a statement issued to the Irish Stock Exchange. Net interest margin, a key measure of banks' profitability, increased to 2.32pc, driven by lower costs. It's the highest for any Irish bank.

The half-year results were CEO Richie Boucher's last before he retires in October, but he opted to avoid media events yesterday, in order to keep the focus on the bank's progress rather than his own exit, the bank said.

Shares were up 0.64pc yesterday at €6.93 each.