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Awards for Excellence 2021: Best bank in Ireland



Best Bank: Bank of Ireland

Restrictions associated with the Covid-19 pandemic hit Irish banks hard last year, with the sector reporting a consolidated net loss of €1.6 billion in 2020, compared with a consolidated net profit of €842 million in 2019. This was largely due to higher loan loss provisions, which increased to €2.7 billion in 2020 from €241 million in 2019. Irish Banks’ NPLs had increased by 26% year on year by the end of 2020.

Ireland’s best bank this year, Bank of Ireland, did not escape unscathed. The impact of the pandemic, along with a revised definition of default in the first half of 2020, saw its NPLs increase by 11% year on year; although the equivalent rise at rival Allied Irish Banks (AIB) was 24%. Underperforming loans increased by 183% year on year at Bank of Ireland and by 136% at AIB.

Francesca McDonagh. Photo: Getty

While Bank of Ireland reported an underlying loss before tax of €374 million for the whole year, the group returned to profitability in the second half of 2020, with underlying profits of €295 million. By the end of the year 93% of payment moratorium recipients in Ireland returned to their pre-Covid schedule and 6% had additional forbearance measures approved. In the UK book, 90% of payment breaks returned to the pre-Covid schedule, while 2% needed additional forbearance measures.

As the industry emerges from the pandemic, Bank of Ireland, under group chief executive Francesca McDonagh, is investing in digital transformation to better position itself for the wider recovery. It will reduce the size of its branch network in Ireland and, as part of this move, it has entered into a new partnership with the Irish post office, An Post. This will allow customers to access to banking services at more than 900 local post offices.

In April 2021, the bank also announced the proposed acquisition of the entire performing loan portfolio of KBC Bank Ireland. Under the deal it could acquire up to €9 billion of performing loans, almost all of which are residential mortgages. This would potentially increase its total net loan portfolio in Ireland by 19% and its Irish residential mortgage portfolio by around 39%.

The bank’s CET1 capital ratio stood at 14.7% in March 2021, 490bp above regulatory requirements for the end of 2021. And despite a tough year, Bank of Ireland shares rose 154% over the awards period, making it the best performing stock in the Euro Stoxx Banks Index.

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