Shifting property prices, Brexit and disruption in financial markets all present "inherent risks" to Bank of Ireland, the company said in a bond prospectus issued on Tuesday.
The bank said it could be “materially adversely affected by the UK’s withdrawal from the EU”, noting consumer confidence and customers ability to meet their financial obligations could be affected.
“Uncertainty following the UK’s decision to withdraw from the EU may result in a reduction or delay in capital expenditure by businesses and a consequential reduction in demand for business lending. Such volatility and uncertainty may persist or worsen throughout the process of negotiation to determine the future terms of the UK’s relationship with the EU,” it said.
Bank of Ireland was highlighting risks to investors in an updated bond prospectus for its €25 billion Euro Note Programme approved by the Central Bank last year.
Ireland’s largest bank by assets also flagged concerns surrounding the adverse effect Brexit could have on the value of Sterling, the devaluation of which could reduce Ireland’s exports to the UK and lead to an increase in unemployment.
Brexit and Sterling concerns aside, Bank of Ireland noted credit risks associated with fluctuating property prices considering 59 per cent of its loan book was comprised of residential mortgages at the end of 2017.
“Residential mortgage exposures originated and managed in Ireland and the UK represent a material concentration of credit risk,” the bank said, again suggesting Brexit could cause a deterioration of credit quality of the group’s customer, sovereign and banking exposures.
The bank, of which 14 per cent is controlled by the State, also said increasing protectionism, changes in mortgage lending rules, a substantial increase in interest rates in the short to medium term, and a further break up of the EU are all specific risks facing the business.
