BoI chief tells shareholders bank 'will look at tactical and strategic solutions' to further reduce costs

Bank of Ireland CEO Francesca McDonagh. Pic: RollingNews.ie

Bank of Ireland "will look at tactical and strategic solutions" to cut its costs, chief executive Francesca McDonagh said, as it faces into the challenges of lending into an economy hard hit by the Covid-19 crisis.

Ms McDonagh told the bank's virtual gathering of shareholders that the bank was nonetheless in good shape and reiterated the measures it had delivered through payment breaks for personal and business customers in the last two months. The bank gave few further details about the financial hit it was facing since issuing its update last week. 

However, the CEO told shareholders today it would extend its programme of cost-cutting. "We will look at tactical and strategic solutions to further reduce our costs," Ms McDonagh said.

"We will allocate our resources to ensure the group is best positioned and appropriately structured to compete in the post-Covid environment," she said. 

Last week, the bank said that in the first three months of the year it had not experienced any increase in the amount of bad loans it carries. However, the first quarter only captured the first two weeks of the lock down of businesses in Ireland and Britain as large parts of both economies shut down.  

Unemployment and people receiving some sort of pandemic wage-support or payment from the Government has since soared to 1.26 million -- equivalent to two thirds of the all the workers in the private sector.                         

Analysts say that Irish banks will be loss making his year and could be loss making in 2021 and their bad loans will rise again, as customers are unable to pay loans after their three or six-month breaks come to an end.   

Ms McDonagh reiterated that the bank had cancelled its 2019 dividend following the ECB's recommendation for eurozone banks to preserve capital and keep lending into economies during the Covid-19 crisis   

"In Ireland, we took the lead in changing our standard payment terms for our own SME suppliers, paying within five days rather than the contractual 30," she said. 

"This has provided a cashflow lifeline to small businesses across the island of Ireland, many of who are also our customers," the CEO said. 

Bank of Ireland shares ended just over 1% higher. 

Shares in Glenveagh Properties, which like other Irish house builders and the Irish banks has been badly hit, rose over 5.5% following its agm.