If 2022 was a rare bright spot for Irish banks, the positive news may continue
Following years of ultra-low interest rates internationally, shrinking loan books and demands from regulators to hold ever-increasing amounts of expensive capital, news in 2021 that Ulster Bank and KBC Bank Ireland were quitting the market prompted investors to look afresh at the remaining lenders, as they prepared to divide up the exiting banks’ loan books.
The lender, where Myles O’Grady was installed as chief executive in November, now sees its net interest income growing by about 10 per cent in 2022. That points to a full-year figure of €2.44 billion. Net interest income accounted for three-quarters of Bank of Ireland’s total operating income last year.
While Irish banking industry executives say they have yet to see an uptick in non-performing loans, it is only a matter of time. Deutsche sees loan loss provisions across the three Irish banks rising from a combined net figure of about €100 million this year to €560 million in 2023. It is widely expected that the holding will fall below 50 per cent in the first half of next year. Meanwhile, Permanent TSB’s purchase of much of Ulster Bank’s loan book has seen the UK-owned lender’s parent, NatWest, take a 16.7 per cent stake in the bank as part payment. This diluted the Government’s previous 75 per cent interest to 62.4 per cent — albeit in a much bigger and more viable company.
Donohoe has left it to his successor, Michael McGrath, to decide when to lift the €500,000 salary cap at AIB and PTSB.The tracker-mortgage scandal, dating back to 2008, when banks started to deny borrowers their right to rates tracking the main ECB rate, came to a head, of sorts, in 2022 as the Central Bank concluded its enforcement investigations into the banks.
However, the liquidators decided at the height of the pandemic in 2020 to extend its lifespan by two years to the end of 2024. But there are risks that even that date may be missed, as the liquidators have pushed out to 2024 the planned sale of Ukrainian and Russian property once owned by the family of businessman Seán Quinn, as a result the Kremlin’s invasion of its western neighbour earlier this year.
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