The head of the largest bank in the Republic believes the Irish property market is about to hit a bottom.
“We think the property market is beginning to stabilise, in particular in urban areas,” Bank of Ireland boss Richie Boucher said last week. “This time last year many of those who had mortgage approval were not taking up the mortgages, as they were still nervous about buying. Now, estate agents are saying there are more buyers than sellers in urban areas.”
Boucher, who presented the bank's interim results last Friday, was appointed to the helm of BoI in February 2009 — shortly after the bank received a €3.5bn (£2.75bn) government bailout.
A few months after he was appointed group chief executive, Boucher announced the bank had made a €7m (£5.5m) loss for the year — compared with a €1.9bn (£1.5bn) profit the year before. The bank's losses have climbed since, peaking at €3.46bn (£2.7bn) in 2010.
Bank of Ireland made a €1.25bn (£0.98bn) loss in the first six months of this year. Most of this loss comes from the €941m (£737m) the bank has set aside to cover loan losses.
It’s understood the bank expects to return to profitability in 2014. However, a prolonged economic downturn would scupper such hopes.
Although Ireland is technically out of recession, most of this recovery has been export-led. Ongoing weaknesses in world economies could dampen demand for Irish exports, according to the bank's interim report.
To rebuild profits, the bank will cut costs and try to increase revenues by selling new products.
“Our balance sheet is reducing by a third, so our costs must be realigned with that,” said Boucher. “As we restructure the group, regrettably the number of people that we employ will reduce.”
Bank of Ireland has already shed about 3,700 staff since 2009.