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WIKI ANALYSIS
The Governor and Company of the Bank of Ireland (BOI or Bank of Ireland) is one of the largest financial services groups in Ireland with total assets of 189 billion (US$251 billion) at March 31, 2007. The company conducts its business through 295 full-time retail bank branches, of which 251 were in Ireland and 44 in Northern Ireland at March 31, 2007. There are no full-service retail bank branches in Britain. Operations in the rest of the
world are undertaken by Bank of Ireland Asset Management through offices located in the US, the UK, Australia, Canada and Japan, Corporate Banking through offices located in the UK, France, Germany and the US, and Global Markets through offices located in the UK and the US. The company operates through four main divisions: Retail Republic of Ireland (accounting for 40% of pretax profits in the fiscal year ending March 31, 2007), Capital Markets (29%), UK Financial Services (23%), and Bank of Ireland Life (8%).
Retail Republic of Ireland offers a full range of banking services to all major sectors of the Irish economy, including individuals, small and medium-sized commercial businesses, and industrial companies. Bank of Ireland Life offers life assurance, protection, pensions, and investment products to Bank of Ireland customers in Ireland through the extensive branch banking network, as well as the independent intermediary market and a direct sales force. The Capital Markets division provides corporate banking,
global markets, asset management, and corporate finance services, principally in Ireland, the UK, Continental Europe, and the US. UK Financial Services brings together all of the BOI's significant activities in the sterling area, including personal lending, business banking, and the sale of banking and insurance products through the UK Post Office.
Bank of Ireland's main competitors are other banks, in particular Allied Irish Banks plc, Ulster Bank Ltd, HBOS plc, National Irish Bank Ltd, Northern Bank Ltd, and Irish Life and Permanent plc.
Business Financials
From FY2008 (ending 03/31/08) to FY2009 (ending 03/31/09), IRE operating income decreased 5%. The bank did make efforts to decrease portfolio risk in 09, as it increased its Tier 1 Capital Ratio from 9.4% to 12.6% and decrease its Risk Weighted Assets from €117 million to €105 million.[1]
For a more comprehensive financial assessment, refer to Data Central.
Business Segments
IRE operates in four main segments:
Capital Markets (88.0% of FY09 Income)
The Capital markets segment offers global interest rate and asset management products. From FY08 to FY09, Capital Markets operating income increased 11%.[1]
Retail Republic of Ireland (3.7% of FY09 income)
The Retail Republic of Ireland segment offers consumer, business, and private banking to residents of Ireland. From FY08 to FY09, the Retail Republic of Ireland segment operating income decreased 6%.[1]
UK Financial Services (8.3% of FY09 income)
The UK Financial Services (GB) segment provides banking products, such as residential mortgages and loans to Great Britain, Scotland, and Northern Ireland. From FY08 to FY09, UK Financial Services (GB) operating income increased 10% due to higher deposit volumes.[1]
Losing Segments
- The Bank of Ireland Life segment posted a €149 million lost from FY08 to FY09.
- Group Centre lost €166 million in FY09.
Trends and Forces
U.K. Banks have been Hit just as Hard as U.S. Banks.
It is common knowledge that U.S. banks, such as Bank of America (BAC), Citigroup (C), and Lehman Brothers (LEH), have suffered millions in losses due to the 2008 Financial Crisis. U.K. banks have not been immune to the U.S. crisis, as the U.K. government has invested €781.2 billion, compared to ~ €9.1 trillion ($12.8 trillion) invested by the U.S. government.[2] U.K. banks have U.S. commercial real estate exposures -- in the form of loans and other debt mortgage-backed securities (MBS).[3] So hardships in the U.S. housing market and banks suffering losses due to subprime lending in turn causes foreign banks to suffer losses.
Some analysts suspect that the U.K. is doomed for a bigger recession than the U.S. in 2009 and 2010.[4] U.K. GDP has decreased 33% since the end of 2007[4] and unemployment reached 1.54 million in May.[5] he Confederation of British Industry predicts that U.K. unemployment will peak at 3.03 million (9.6% of U.K. population) by Q310[5] On top of all that, the U.K. housing market has been miserable -- as mortgages to home buyers dropped 49% since the beginning of 2008[4] and housing prices have fallen 20% in that time span.[6] In efforts to reduce the downfall, the U.K. government is on pace to lend over £1 trillion to bailout banks in 2009, which it hopes will boost lending, but may just cause a bigger debt bubble.[4] Investors might want to look further than "across the pond" for economic optimism.
Competition
| Competition | Bank of Ireland (IRE) | Allied Irish Banks (AIB) | Royal Bank of Scotland (RBS-LN)
|
| Net Interest Income €M | 3,670.00 | 3,867.00 | 18,675.00 |
| Net Income €M | 69.00 | 729.00 | (23,710.0) |
| Loan Loss Provision €M | 1,513.00 | 1,822.00 | N/A |
| Total Assets €M | 194,116.00 | 182,143.00 | 2,401,650.00 |
| Total Liabilities €M | 187,264.00 | 173,205.00 | 2,342,770.00 |
| 12 Month Correlation to IRE[7] | 1.000 | 0.985 | 0.977 |
References
- ↑ 1.0 1.1 1.2 1.3 Bank of Ireland 2009 Annual Report
- ↑ Seeking Alpha, "These European Nations Are in Worse Shape than the U.S.," 06/15/09
- ↑ Seeking Alpha, "Second Stress Wave for European Banks," 04/23/09
- ↑ 4.0 4.1 4.2 4.3 Seeking Alpha, "Is U.K. Headed for an Even Worse Great Depression? (Part 1 of 3)," 02/18/09
- ↑ 5.0 5.1 Bloomberg, "U.K. Unemployment Rises Less Than Economists Forecast," 06/17/09
- ↑ Seeking Alpha, "U.K. Housing Still a Risky Buy," 06/21/09
- ↑ Yahoo! Finance Historical Prices
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