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Bank of Ireland to pay first dividend in 10 years

Bank of Ireland plans to pay a dividend of 11.5 cents per share in its first payout to investors in a decade even as underlying profits remained static.

In results just published the lender reported an underlying profit of €1.08bn for 2017 compared to €1.07bn the previous year.

In her first set of results since taking over the reins last year, new chief executive, Francesca McDonagh confirmed the bank will recommence dividends with a payout of €124m in 2018 as the bank seeks to move on from a lengthy period of restructuring.

Non-Performing exposures at the group shrank sharply, falling by 31pc to €6.5bn. Impaired loans reduced by 35pc, underscoring the bank’s success in ‘curing’ soured loans as house prices continue to rise and the economy continues to expand.

Despite the intensifying competition, the bank’s share of the mortgage market has increased to 27pc, still ranking it behind market leader AIB. Overall new lending rose by 11pc to €14.1bn in 2017.

Net interest margin – a key measure of profitability – edged up by 9 basis points over the period to 2.29pc. However the bank said this growth is likely to moderate next year and predicted the 2018 NIM figure will be “modestly lower” than 2017.

Bank of Ireland increased its Core Equity Tier 1 Capital – a key measure of a lender’s ability to withstand a downturn – to 13.8pc, compared to 11.3pc at the same time last year.

Ms McDonagh, Bank of Ireland, stressed that all trading divisions were profitable in 2017 and emphasised the expanded market share in residential mortgages. She also stressed the lender holds the “largest market share in the business banking sector” – a position the bank has held for some time.

She said “we materially improved our asset quality, reducing our level of non-performing exposures” and pointed to the well-flagged re-starting of the dividend repayment.

The bank said it is committed to the “successful implementation of investments to replace Core Banking Platforms” or Project Omega as the €8000-€900m IT investment was once termed.

The bank has not altered its tracker provision and said the €170m set aside to deal with the over-charging scandal had been classified as non-core.

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