Bank of Ireland profit falls 31% amid impairment charge as tariffs weigh – The Irish Times

Bank of Ireland reported a 31 per cent drop in net profit for the first half of the year as its net interest income declined and the bank increased loan impairment charges as US tariff-related risks weigh on the economic outlook.

Still, the bank marginally increased its full-year net interest income forecast and maintained its medium-term financial targets.

Bank of Ireland’s net profit fell to €608 million in the first half, it said in a statement on Tuesday.

While its net interest income declined to €1.67 billion from €1.8 billion for the same period last year, the result was better than the company had expected, it said.

The lender hiked its net impairment losses to €137 million from €50 million, driven by an increase in “loan loss experience” and as management took a €40 million general provision to reflect “the evolving macroeconomic outlook”.

While Bank of Ireland’s economists upgraded their Irish economic forecasts in recent weeks, this was caveated on the EU reaching a trade deal with the US that wouild leave tariffs on most Irish goods at 10 per cent. However, an accord reached over the weekend will see a 15 per cent tariff apply to most imports from the EU.

Looking ahead, the bank now sees its net interest income coming in at €3.3 billion, up marginally from €3.25 billion previously forecast. It reported €3.56 billion of net interest income last year in a higher interest rate environment.

It continues to expect its so-called business income – including income from its New Ireland life business, Davy, and shares of joint ventures – to expected to rise 5 per cent.

“The group had a good first half performance,” said chief executive Myles O’Grady. “Against an uncertain international backdrop, the Irish economy is resilient. Bank of Ireland is well positioned to navigate this environment, generating strong levels of capital to support customers, grow our balance sheet, invest in the business and deliver attractive shareholder returns.”

Bank of Ireland reaffirmed its full-year guidance of delivering net profit equivalent to about 15 per cent of shareholders’ tangible equity in the business.

Having recommenced interim ordinary dividends in 2024, the bank announced that it will pay an interim dividend of €243 million on its result for the first half.

Since the start of 2023 the group has returned €2.6 billion to shareholders through a series of buybacks and dividends, it noted.