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Bank of Ireland reports lower first-half profits but meets key targets

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DUBLIN (Reuters) – Bank of Ireland <BIRG.I> shares fell by more than 5% on Monday after the Irish bank reported lower first-half profits.

Underlying profit before tax for the first half of the year was 376 million euros (£338.3 million), which compares to 500 million euros for the same period last year.

Customer lending grew by 1 billion euros to 78 billion euros, with underlying growth of 1.2 billion euros in new lending over redemptions. Most of the underlying growth came from its international business.

Chief Executive Officer Francesca McDonagh told Reuters that the bank was meeting its key targets and efforts to reduce costs have momentum, and she was confident the bank would achieve a 1.7 billion euro cost base by 2021.

“Costs are continuing to improve, cost are down 3% and that is a continuation of progress we have made in the 18 months,” she said.

Bank of Ireland, like all Irish banks, is under pressure from the European Central Bank to reduce bad loans which ballooned after Ireland’s property crash. The CEO said the bank was on track to hit its target of reducing bad loans to 5% of its total loans by the end of the year, bringing the bank into line with its European peers.

Bank of Ireland’s ratio improved by 1% to 5.3% for the first half of the year.

Bank of Ireland’s net interest margin was steady at 2.16%,and its fully loaded capital ratio increased by 40 basis points to 13.6%.

The bank reported an impairment charge of 79 million euros or 21 basis points, and it said it expects the charge to be in the range of 20-30 basis points for the period 2019 to 2021.

(Reporting by Graham Fahy. Editing by Jane Merriman and Louise Heavens)

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