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Investing.com -- Bank of Ireland Group PLC (LON:BIRG) on Tuesday reported first-half profit before tax of €721 million with a return on tangible equity (ROTE) of 14.8%, as higher impairment charges offset strong growth in its Irish business.
The bank’s shares fell 5.8% following the results, primarily due to impairment charges exceeding analyst expectations.
The bank reported net interest income of €1.67 billion for the first half of 2025, down from €1.80 billion in the same period last year, but ahead of internal expectations.
This performance led Bank of Ireland to upgrade its full-year net interest income guidance to approximately €3.3 billion, up from its previous guidance of more than €3.25 billion.
However, impairment charges rose to €137 million (33 basis points), which was 21% higher than consensus estimates. The bank has updated its full-year impairment guidance to approximately 30 basis points, up from its previous guidance of "low to mid-20s basis points."
"The Group had a good H1 performance, with a profit before tax of €0.7 billion and is on track to deliver its full year targets," said Myles O’Grady, Bank of Ireland Group CEO.
"Against an uncertain international backdrop, the Irish economy is resilient. Bank of Ireland is well positioned to navigate this environment, generating strong levels of capital to support customers, grow our balance sheet, invest in the business and deliver attractive shareholder returns."
The bank announced an interim dividend of 25 cents per share, representing a 40% payout ratio. Business income increased by 4% year-over-year to €399 million, driven by strong performance in Wealth and Insurance, which grew by 8%.
Operating expenses increased by 3% year-over-year, in line with guidance, resulting in a cost-to-income ratio of 48%.
Bank of Ireland’s loan book stood at €82.2 billion in June, slightly down from €82.5 billion in December 2024. However, the bank reported strong growth in Ireland of €1.3 billion, primarily driven by Irish mortgages, where it captured a 40% share of new lending. Customer deposits increased to €105.0 billion, up €1.9 billion from December.
The bank reaffirmed its full-year 2025 guidance for adjusted ROTE of approximately 15% and organic capital generation of 250-270 basis points. It also maintained its positive medium-term outlook, with ROTE expected to build to more than 17% by 2027.