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Mortgage lending at Bank of Ireland soars by 30pc in first three months of 2017

Bank of Ireland’s new mortgage lending recorded a 30pc increase in the first three months of the year versus the same period in 2016.

The bank has announced that its net interest margin has increased to 2.3pc in the first three months of 2017 from 2.27pc at the end of 2016.

The bank’s net interest margin shows how profitable the bank’s lending is. The increase is attributed to lower funding costs and an evolving asset mix.

Customer lending volumes were €78bn at the end of March, with cash redemptions referenced across the defaulted loans, Irish tracker mortgage and legacy run-down portfolios together with higher-than-expected redemptions in the corporate business.

However the bank’s defined benefit pension deficit increased by €200m to €650m.

The increase in the pension scheme is associated with a tightening of the credit spread between AA Euro corporate bond yields versus risk-free rates.

While BOI has hedged the impact of discount rates on the liability side of the defined pension scheme, volatility from credit spreads remains – which is far more difficult to hedge against.

Underlying other income, operating expenses and BOI’s core banking system replacement project are described as being in line with BOI’s expectation.
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