Bank profits expected to plunge 40%
Bank of Ireland is expecting its profits to plunge up to 40%, managers have said.
In an interim statement, the bank's bosses said it was hit by lower income and higher government charges for the bank guarantee scheme.
Underlying operating profit before impairment charges will be 35% to 40% lower than the 1.5 billion euro posted last year, they believe.
The bank has been saddled with loans of 2.1 billion euro that were bound for the National Assets Management Agency (Nama) but which have now been excluded because of a change in the threshold.
Management said 1.6 billion euro of this portfolio was impaired to the tune of half its value, as of June this year.
Bank of Ireland has now offloaded 3.75 billion euro of land and development loans, at an overall 36% discount, to the toxic assets agency.
It estimates another 6.35 billion euro in loans remain eligible for Nama which would be discounted by 42%.
The bank said arrears on its Irish mortgages have continued to rise but it believes that figure is stabilising, particularly among owner-occupiers. Losses on Irish mortgages are in line with what the bank had expected, management said.
Arrears in the bank's UK mortgages have stabilised over recent months with losses less than previously anticipated, they said.
Unsecured customer loans were performing better than expected but business banking had deteriorated, according to the interim statement.