The chief executive, Paul D'Altona, said that following the successful integration of the Bristol & West, the former UK building society which the bank bought for pounds 600m in 1997, expansion in the UK remained one of BOI's top priorities. "We believe we have a reasonable track record on acquisitions. We are interested in having a greater scale in Britain." But he added: "We have no hang up about returning capital. We would rather wait two years to do the right deal than do the wrong deal in six months."
Mr D'Altona also refused to rule out a bid for Bradford & Bingley, the building society, although he pointed out that if the bank would need to issue new shares to fund a deal on that scale. "To raise that capital we would have to have a good story," he said.
The booming Irish economy continues to drive Bank of Ireland's profits. These rose 24 per cent pre-tax to Ipounds 659m in the year ended 31 March, partly as a result of the inclusion of a full year from Bristol & West for the first time. Total income grew by 25 per cent to Ipounds 1.51bn.
Bristol & West turned in an operating profit before tax of pounds 131m reflecting a 12 per cent rise in loans to pounds 12bn year on year. The bank said that its share of net residential mortgages had risen to 4.8 per cent, twice its natural market share.
Mr D'Altona admitted that the fall in interest rates in the euro zone, of which Ireland is a member, were hitting loan margins. But he insisted that the impact was more than offset by volume growth.
The main worry is that the Irish economy might hit the buffers. However, Mr D'Altona insists: "There is plenty of steam in the Irish economy." He says that the conditions in the UK savings and mortgage market remain "challenging". The bank has also seen Treasury profits fall because of the lower markets volatility since the launch of the euro. On the positive side lower interest rates are encouraging savers into long-term fee-based products.
Analysts forecast earnings of around Ipounds 655 next year putting them on 13 times prospective. A well run bank, it has lagged rival Allied Irish Banks because of the lack of takeover froth. A buy.Reuse content