By Padraic Halpin
DUBLIN (Reuters) -Bank of Ireland increased its returns to shareholders following a 4% fall in full-year pretax profit and said further consistent deposit and loan book growth would support a progressive dividend policy up to 2027.
Ireland’s biggest lender provided estimates for 2026 and 2027 for the first time on Monday, saying it expected the Irish economy to expand by more than 3% each year with its deposit and loan books to grow by 3% and 4% respectively per year.
That would translate into net capital generation equivalent to around 45% of the bank’s end-2024 market cap from 2025 to 2027, it said, supporting a dividend payout ratio of 40-60% with further share buybacks expected next year and potentially beyond.
“I think in terms of the confidence, the bedrock of that is the strength of the Irish economy. Obviously it’s performing very well and outperforming euro zone peers,” Bank of Ireland finance chief Mark Spain told Reuters.
While U.S. President Donald Trump’s pledges to cut corporate tax rates and impose tariffs could pose a challenge to Ireland’s foreign multinational-focused economy, Spain said Ireland faces any potential fallout from a “good position” with the bank’s loan books and customers “in very good shape.”
Shares in the bank were up 1.7% in early trading.
Full-year pretax profits slipped to 1.86 billion euros ($1.96 billion) from 1.94 billion a year ago. The bank plans to return 1.22 billion euros to shareholders through a mix of dividends and share buybacks, equivalent to 80% of its earnings.
That compared with a total distribution of 1.15 billion euros a year ago. The bank delivered a return on tangible equity (ROTE) of 16.8% and expects a ROTE of 15% this year, before growing above 17% by 2027.
Bank of Ireland also set aside 172 million euros to cover possible costs related to a UK industrywide probe into motor finance commissions.
It said this was its best estimate of potential redress and compensation but that it was possible the financial impact in future periods could be materially higher or lower.
($1 = 0.9514 euros)
(Reporting by Padraic Halpin, Editing by Louise Heavens and Hugh Lawson)
