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DUBLIN (Reuters) – Bank of Ireland <BIRG.I> shares fell more than 5% on Monday after the Irish bank announced a decline in profits in the first half.
Underlying pretax profit for the first half of the year was 376 million euros, compared with 500 million euros for the same period last year.
Customer loans increased by 1 billion euros to 78 billion euros, with underlying growth of 1.2 billion euros in new repayment loans. Most of the underlying growth comes from its international operations.
Managing Director Francesca McDonagh told Reuters that the bank was meeting its key objectives and that efforts to reduce costs were gaining momentum. She was confident that the bank would reach 1.7 billion euros in costs by 2021.
"The costs continue to improve, the costs are down 3% and it's a continuation of the progress made over the 18 months," she said.
Bank of Ireland, like all Irish banks, is under pressure from the European Central Bank to reduce bad debts that have exploded after the real estate crash in Ireland. the CEO said the bank was on track to reach its goal of reducing bad debts to 5% of its total loans by the end of the year, aligning the bank with its European counterparts.
The Bank of Ireland ratio improved from 1% to 5.3% for the first half.
Bank of Ireland's net interest margin remained stable at 2.16% and its fully loaded capital ratio increased by 40 basis points to 13.6%.
The bank announced an impairment loss of 79 million euros, or 21 basis points, and expects this charge to be between 20 and 30 basis points for the period 2019-2021.
(Report by Graham Fahy, Edited by Jane Merriman and Louise Heavens)
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