Another 450 staff will leave Bank of Ireland as part of its voluntary redundancy programme, it emerged yesterday.
Bank of Ireland chief financial officer Andrew Keating said the bank has still to use up €25 million of a €45 million charge it has taken for redundancies to trim its costs base.
Mr Keating said each redundancy costs on average €55,000 with the bank receiving a payback after 12 months. This means 454 staff will depart in the next year or so.
The bank’s annual results yesterday showed it cut its cost base by 10 per cent or €80 million last year to €691 million as its headcount fell 761 to 11,255.
Chief executive Richie Boucher said about 2,000 staff have left on voluntary severance terms since June 2012. He said the bank would consider additional outsourcing if it would benefit the business.
“I think we will continue to use a programme of outsourcing . . . where we have particular needs at a point in time,” he said, adding the bank had already outsourced some functions, notably in technology.
Bank of Ireland’s operating income rose to €2.6 billion last year from €1.8 billion in 2012. Its expenses dropped by €57 million to just under €1.6 billion. Fees paid to the State from the Eligible Liabilities Guarantee, which the Government closed off last year, dropped to €129 million from €388 million in 2012.
Strong rebound
The results show a strong rebound in the underlying operating profit performance of the retail Ireland business, with it almost trebling to €421 million. Retail UK generated €231 million in 2013 compared with just €15 million the previous year.
The impairment on Irish residential mortgages rose by 30 per cent to €542 million but fell by the same percentage in the UK to €31 million.
The increase in Ireland reflected the Central Bank of Ireland’s balance sheet assessments last year. Mr Boucher reiterated his view the bank is well-capitalised ahead of pan-European stress tests.
Bank of Ireland has been generating capital since the beginning of 2014, and capital generated will be prioritised towards facilitating the derecognition of the remaining € 1.3 billion 2009 preference shares in 2016. Eliminating these shares, which carry a coupon of 10.25 per cent, would allow the bank consider reinstating a dividend payment for shareholders, Mr Boucher said.
Approvals for new and increased credit for SMEs amounted to €4 billion in 2013, up about 8 per cent on 2012. This reflected an 85 per cent approval rate.
Property market
Mortgage applications of €2.2 billion were approved for 12,500 customers, with first-time buyers accounting for almost half of all drawdowns. Mr Boucher said the level of drawdown by mortgage applicants was moving towards 50 per cent from 40 per cent last year, reflecting more activity in the property market.
He said key to improved profitability would be reducing “current elevated impairment charges to normalised levels” while rebuilding loan volumes in its core franchise.
