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Bank of Ireland takes €937m Covid hit

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  • 05/08/2020
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Bank of Ireland takes €937m Covid hit
The Bank of Ireland has set aside an impairment charge of €937m to deal with Covid-19 related losses, as the impact of the coronavirus took the group into a loss for the six months to the end of June.

 

The lender which operates as Bank of Ireland UK in this country, said underlying losses had also been driven by lower operating income on top of credit losses.

In a downbeat outlook, the bank said it expects large falls in GDP and employment in both Ireland and the UK compared to 2019, before a return to economic growth in 2021.

Overall, the group was at a €669m underlying loss before tax for the period, with gross new lending of €7.1bn which was €0.6bn lower when compared to the same period in 2019.

 

UK distribution

In the UK specifically the lender said it had increased the distribution reach of its ‘bespoke’ mortgages proposition in 2020, as part of the reposition strategy towards higher margin business.

Existing customers have also been provided with improved access to self-serve online, including online mortgage offers.

The UK arm of the company reported an underlying loss before tax of £145m for the six months ended 30 June 2020 from an underlying profit £80 million in the same period last year.

More than 66,000 UK customers received payment breaks across the group’s lending portfolio.

In a statement, Francesca McDonagh group chief executive, said: “Covid-19 has had a material impact on the group’s financial performance and outlook.

“The changed economic environment in Ireland and the United Kingdom (UK) has resulted in lower levels of economic activity, credit formation and business income.

“Higher levels of credit impairment charges and reduced revenues from the lower-for-longer interest rate environment also weigh on the group’s earnings.

“Brexit uncertainty continues to impact consumer and business confidence and activity levels.

“While aspects of our outlook are more positive than when we presented our Q1 trading update and we expect further economic recovery in the second half, we continue to expect large falls in gross domestic product (GDP) and employment in both Ireland and the UK compared to 2019, followed by a return to economic growth in 2021.”

 

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