Strong second half limits Bank of Ireland 2020 loss By Reuters

DUBLIN (Reuters) – Bank of Ireland limited its underlying 2020 loss to 374 million euros ($452 million) after a return to profitability in the second half, the bank said on Monday.

Ireland’s largest bank by assets also announced the closure of one-third of its branches in Ireland.

The bank set aside 1.1 billion euros to cover possible loan defaults due to COVID-19 disruption, the bottom of its forecast range that it expects to capture the majority of credit impairment risk associated with the pandemic.

An underlying 295 million euros second half profit limited the damage as lending and business income improved.

Chief Financial Officer Myles O’Grady said those trends continued into 2021, although Ireland was in a long lockdown again.

“It’s clear that there is some impact from this lockdown but the signals overall are encouraging. We do think (the second half) will be a return to a more normalised level of activity,” O’Grady told Reuters.

The bank cut it costs by 4% year on year in 2020, meaning it achieved its 1.7 billion euro annual cost target one year early. It set a new goal of cutting costs further to 1.5 billion euros by 2023.

That will partly be achieved by the branch closures with its Irish network cut to 169 from 257 and Northern Irish presence more than halved to 13. It struck a deal with the Irish post office to offer customers access to banking services at An Post locations.

Bank of Ireland’s core Tier 1 capital ratio, a key measure of financial strength, stood at 13.4% versus 13.5% at the end of September. The bank said it expected capital to remain broadly in line with those levels in 2021.

Analysts at Davy Stockbrokers said the results were “better across income, costs and, notably, impairments.”

($1 = 0.8272 euros)