DUBLIN: For the first time, Bank of Ireland has said it may have to put aside more money to meet the costs of the tracker mortgage scandal, but says any additional amount will be “manageable”. The shares — which, alongside many European banking stocks, got a boost from ECB’s stimulus announcement — surged 5%, as investors interpreted the bank as implying that it was still on course to pay out a dividend in 2018. The resumption of a dividend had already been delayed on at least one occasion. “We take the comments above to mean that any provision ultimately required will not constrain the ability to pay a dividend next year,” said Investec Ireland analyst, Owen Callan. “As such, this provides yet a further element of certainty that the total financial impact from the tracker-mortgage issue will be manageable, from the perspective of previously stated financial objectives, such as minimum capital levels and dividend distribution.” The bank again said it would tell all 4,300 of its tracker customers affected by its mistakes how they would be compensated, from November 10. Davy analysts said: “We do not believe this will act as an impediment to the recommencement of dividend payments, with full-year 2017 results.” “To the extent that an additional provision associated with this review is required, the group anticipates this to be manageable, in the context of the group’s capital position,”
Bank of Ireland said. In the trading statement, the lender also said the group advanced €10bn in new loans in the first nine months of the year. Its mortgage volumes in the Republic rose 38% from a year earlier and its share of the home loans market had edged higher, to 26%. At 2.34%, its net interest margin — a key measure of profitability — would ease slightly this quarter, because of its recent debt-raising. Meanwhile, the huge margins Irish banks can tap from mortgage-lending were again highlighted. The Central Bank’s Household Credit Report showed that home-loan rates were elevated compared with the rest of Europe. “The interest rate on current outstanding mortgages, in Ireland, was 2.59% as of August, 2017, relatively unchanged from one year earlier,” according to the research. “Interest rates in Ireland remain high, relative to the sample median in other European countries presented,” it said. Separate Central Bank research showed first-time buyers had a larger loan size, property value, loan-to-value, loan-to-income, and income level in the first six months of the year, after the Central Bank loosened its mortgage controls.
