Bank of Ireland Group is expecting a decrease in net interest income but a rise in business income for the upcoming year. The company outlined capital returns representing 13% of its market capitalization.
Net Interest Income Projections
The Irish lender anticipates that its net interest income for 2024 will be approximately 5% to 6% below 3.65 billion euros ($3.95 billion), the annualized run rate from the fourth quarter of 2023. This projection is attributed to the expected lower rate environment. Additionally, growth in its wealth and insurance arm, along with developments at Retail Ireland, will contribute to a mid-single digit percentage increase in business income year-on-year.
Strong Financial Performance in 2023
In 2023, Bank of Ireland reported a pretax profit of EUR1.9 billion, marking a significant 42% increase compared to the previous year. The company attributes this growth to favorable interest rates, strategic acquisitions, and positive business momentum. Operating expenses for the year were aligned with the provided guidance of EUR1.85 billion.
Future Expectations and Initiatives
Looking ahead, the bank foresees that costs in the upcoming year will rise by a mid-single digit percentage due to inflation, business expansion, and investments. The fully loaded common equity Tier 1 ratio, a critical metric reflecting balance-sheet strength, stands at 14.3%, according to Bank of Ireland.
Share Buyback Program and Dividend Proposal
Bank of Ireland has laid out plans for a EUR520 million share buyback program for the year, in addition to proposing a dividend of EUR0.60 per share. The company also aims to commence distributing interim dividends in 2024.
Positive Outlook
Chief Executive Myles O’Grady expressed confidence in the company’s performance, stating that despite external risks, the overall outlook for core markets, especially in Ireland, remains optimistic. The group remains focused on achieving its targets through 2025.
As Bank of Ireland anticipates shifts in income streams and capital returns, it is poised to navigate market challenges while pursuing strategic growth opportunities.
