Bank Of Ireland Expects Lending To Halve

11 May 2020 | 08.51 am

Bank Of Ireland Expects Lending To Halve

Q1 2020 management statement

11 May 2020 | 08.51 am

Bank of Ireland has outlined its expectations for reduced business activity through 2020 in a Q1 management statement.

The bank says that Covid-19 is having a material impact, with lower business activity impacting gross lending volumes. New lending this year could be between 50% to 70% of 2019 volumes, which amounted to €16.5 billion.

Business income is expected to be 30% to 40% lower due to reduced economic activity, the bank stated.

Bank of Ireland expects increased impairment and loan losses over the course of 2020 but insists that in a range of scenarios its fully loaded CET1 ratio would remain above its previous minimum regulatory capital requirement.

CEO Francesca McDonagh (pictured) said the bank has approved 86,000 payment breaks for customers in Ireland and the UK since mid-March.

“The economic outlook for our core markets in Ireland and the UK has deteriorated, with reduced levels of activity across our businesses,” she added. “The economic effects will have a material impact on the group’s 2020 financial performance. The full impact remains uncertain and will be driven by the duration of Covid-19 restrictions and the successful reopening of the Irish and UK economies.”

The bank booked a Q1 impairment charge of €266m. This largely relates to what the bank describes as a €250m ‘management overlay’, reflecting the initial impact of the deteriorating economic environment.

“In the quarter, the group did not experience loan loss outcomes related to Covid-19, and this initial charge does not reflect any material migration from Stage 1 to Stage 2 loans,” the bank stated.

Customer loan volumes were €79.6 billion at the end of March 2020, an increase of €0.1 billion since the end of December 2019, or €1.4 billion on a constant currency basis.

The group’s market share of new mortgage lending in Ireland in Q1 increased to 26%.

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