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Bank of Ireland to pay out fifth of profits in dividend as bad loans fall

Bank of Ireland to pay out fifth of profits in dividend as bad loans fall

DUBLIN: Bank of Ireland has signalled plans to pay out 20 per cent of full-year profit to shareholders as it reinstates dividends for the first time since the onset of the crisis, after the bank’s pension deficit stabilised and its bad loans ratio fell in the first half. The country’s largest bank by assets set aside €70 million, or almost 19 per cent of first-half net income for the a possible dividend early next year. “I would expect that that €70 million would increase over the second half of the year, in line with the profit we would generate at that time,” group chief financial officer Andrew Keating said at an analysts presention on Friday.

The Dublin-based bank decided in February to hold off making shareholder payments for a further 12 months, given volatility in the bank’s pension scheme, where the deficit doubled in the first nine months of the year to €1.45 billion before shrinking to €450 million in the final three months of the year. The pension gap widened to €500 million in June, though it had been at €650 in March. The group, which hasn’t paid a dividend since 2008, ultimately plans to return to paying half of its “sustainable earnings” to investors.

The bank’s interim report showed that impaired loans fell by €800 million to €5.4 billion over the course of the six months as the economy improves and the bank continues to restructure troubled loans, the group said on Friday. Impaired loans ratio peaked at €16.9 billion in 2013, when they made up 18 per cent of the group’s portfolio. Underlying profit for first half came to €480 million, beating Davy analysts’ estimate by 17 per cent. However, the figure is down 14.3 per cent on the same period in 2016, when the result was flattered by €157 million of one-off gains from the sale of the bank’s stake in Visa Europe and sovereign bond investments.