Bank of Ireland Group PLC (LSE:BIRG) reported a first-half pre-tax profit of €721 million on Tuesday, with a return on tangible equity (ROTE) of 14.8%, as increased impairment charges weighed on strong growth within its Irish operations.
Following the announcement, the bank’s shares dropped 5.8%, largely due to impairment charges coming in above analyst expectations.
Net interest income (NII) for the first half of 2025 stood at €1.67 billion, down from €1.80 billion during the same period last year, but surpassing the bank’s internal forecasts.
This solid performance led Bank of Ireland to raise its full-year NII guidance to roughly €3.3 billion, up from the prior estimate of more than €3.25 billion.
On the other hand, impairment charges climbed to €137 million (33 basis points), representing a 21% increase over consensus predictions. As a result, the bank revised its full-year impairment charge forecast to about 30 basis points, up from the earlier guidance of “low to mid-20s basis points.”
“The Group had a good H1 performance, with a profit before tax of €0.7 billion and is on track to deliver its full year targets,” said Myles O’Grady, Bank of Ireland Group CEO.
“Against an uncertain international backdrop, the Irish economy is resilient. Bank of Ireland is well positioned to navigate this environment, generating strong levels of capital to support customers, grow our balance sheet, invest in the business and deliver attractive shareholder returns.”
The bank declared an interim dividend of 25 cents per share, corresponding to a 40% payout ratio. Business income rose 4% year-over-year to €399 million, boosted by an 8% increase in its Wealth and Insurance divisions.
Operating expenses were up 3% compared to last year, consistent with guidance, leading to a cost-to-income ratio of 48%.
At the end of June, Bank of Ireland’s loan portfolio totaled €82.2 billion, slightly lower than €82.5 billion in December 2024. However, the Irish loan book grew by €1.3 billion, driven primarily by mortgages where the bank held a 40% market share of new lending. Customer deposits increased by €1.9 billion since December, reaching €105.0 billion.
The bank reaffirmed its 2025 full-year guidance for an adjusted ROTE of approximately 15% and organic capital generation between 250 and 270 basis points. It also maintained a positive medium-term outlook, anticipating ROTE to surpass 17% by 2027.
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