Bank of Ireland will pump an extra €500m into an annual “transformation programme” aimed at improving its business systems and overhauling its software platform as the lender attempts to reduce costs and drive efficiencies over the next three years.
The additional cash brings the total investment outlay from 2016-2021 to €1.4bn.
According to a much anticipated strategy plan, released this morning by the bank, the massive €900m reform plan to the IT platform, revealed in 2016 and dubbed Project Omega – but now referred to as the ‘core banking systems’ investment – will require a further €250m, taking the total cost to €1.15bn.
In a statement Bank of Ireland’s new chief executive Francesca McDonagh, said the group was in a “strong financial position” after a “period of restructuring”.
The ambitious growth plans are intended to set the group’s course over the next three, cast off the legacy of the crash and propel the bank into a robust expansion phase.
It has set a target of 20pc growth in its loan book by 2021 and pledged to cut the cost base by €1.7bn over that period.
In setting out her vision for the group, Ms McDonagh, who took over the reins from her predecessor, Richie Boucher, in October, emphasised the bank’s determination “to be the national champion bank in Ireland, with UK and selective international diversification.” That is our “strategic ambition” she said.
Yet while the bank is targeting a 10pc return on tangible equity for investors – a key barometer of profitability – there was little guidance on dividends.
The bank said it intends “over time” to “build towards a payout ratio of around 50pc of sustainable earnings”. But highlighted the money may be diverted elsewhere. “To the extent the Group has excess capital, other means of capital distribution will be considered.”
The bank re-affirmed its commitment to the UK market and predicted income from business banking will account for at least a quarter of the group’s total income by 2021.
However the bank is predicting low-level margin uplift over the same timeframe.
It said its net interest margin – the difference between what a bank earns and what it charges savers – will remain “broadly in line with exit 2017 level of 2.24pc”.
The bank’s capital buffers or core equity tier 1 ratio will be kept “in excess” of 13pc over the next three and half years.
Article Source: http://tinyurl.com/kbwqb42
- State loses €4bn as Brexit chaos batters bank shares
- Robots will take half of jobs unless we act
- ‘Paltry fine at odds with costs borne by ordinary citizens’
- Cut to pensions tax relief will lead to mass exodus by savers, warns provider
- Pensioners are biggest losers as ‘fair’ Budget sees them out of pocket
- 21 Belvedere Place, Dublin 1
- +353 1 855 4188
- +353 1 836 6550
- 13 Dec 2018State loses €4bn as Brexit chaos batters bank shares
- 13 Dec 2018Robots will take half of jobs unless we act
- 13 Dec 2018‘Paltry fine at odds with costs borne by ordinary citizens’
- 12 Dec 2018Cut to pensions tax relief will lead to mass exodus by savers, warns provider
- 12 Dec 2018Pensioners are biggest losers as ‘fair’ Budget sees them out of pocket