Bank of Ireland to Close Third of Branches as Losses Mount

(Bloomberg) -- Bank of Ireland Group Plc will cut its branch network by about a third as the pandemic drove customers online and further away from its offices.

The lender will shut 88 of its 257 branches in Ireland and 15 of 28 outlets in Northern Ireland, it said in Dublin on Monday. Bank of Ireland shares rose as much as 4.4% in Dublin to 3.53 euros, rising the most in a month.

“We have reached a tipping point,” Chief Executive Officer Francesca McDonagh said in a Bloomberg TV interview. The changes are “in direct response to customer demand.”

Like other banks across Europe, Irish lenders are seeking to rein in costs amid subdued lending and low interest rates. While the company reached a deal with provide banking services through post offices around the country, the move to close offices provoked immediate opposition among politicians and staff.

The closures are “shameful and an act of betrayal,” Financial Services Union leader John O'Connell said.

The company posted an underlying loss before tax of 374 million euros ($451 million) last year. The bank reduced costs to 1.7 billion euros a year ahead of schedule and aims to cut the cost base to 1.5 billion euros by 2023.

While 2020 had been “challenging,” the bank said it returned to profit in the second half of the year. The macroeconomic environment is “a little bit better” than expected, Chief Financial Officer Myles O'Grady said in a phone interview.

“These are a good set of numbers,” Eamonn Hughes, an analyst at Goodbody Stockbrokers in Dublin, said in a note. “It's early in the year and in extended lockdowns, but momentum is good.”

The results also showed:

• Total income -8% compared to year ago
• Non-performing loans ratio 5.7%
• Fully loaded CET1 ratio 13.4%
• FY21 total income “expected to be broadly in line with 2020 reflecting lower net interest income, higher business income supported by our wealth and insurance business and a lower charge for valuation items”

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