By Padraic Halpin
DUBLIN (Reuters) - Bank of Ireland (I:BKIR) more than doubled its profit in the first half of 2015 as it increased new lending and reduced loan impairment charges, generating capital at a significant pace.
Bank of Ireland has led a sector-wide revival as the Irish economy grows faster than any other in the European Union, with strong growth in its British mortgage business giving it an advantage over its more domestically-focussed rivals.
The bank on Friday reported an underlying pretax profit of 743 million euros (522 million pounds) to June 30, up from 327 million a year earlier and well above the 520 million forecast by analysts polled by Reuters.
"Clearly we are benefiting from our positioning in the two main economies. That's not just in the loan growth, but also our life business and in the bad debt charge," Chief Executive Richie Boucher told Reuters.
"We're seeing continued good momentum and the pipeline of loan applications right across our businesses are good."
Ireland's largest lender by assets, which returned to profit for the first time since the financial crisis last year, cut its impairments by 63 percent to 166 million euros.
Its profit included a 228 million euro gain primarily from a largely completed programme of government bond sales.
That also slowed net interest margin (NIM) growth to 2.21 percent from 2.15 percent seen in the second half of 2014.
Shares in the 14-percent state-owned bank, the only Irish lender to avoid falling under state control after the country's 2008 financial crisis, were flat at a near four-year high of 0.38 euros by 0815 GMT (0915 BST).
"The non-interest income beat is welcome, but will be overshadowed by the weaker-than-anticipated NIM progression," said Eamonn Hughes, an analyst at Goodbody Stockbrokers.
"However, on balance, the much stronger capital position will be the key focus this morning."
Under so-called fully loaded Basel III banking industry rules and excluding 1.3 billion euros of preference shares, the bank's Core Tier 1 capital adequacy ratio rose to 11.1 percent of assets from 9.1 percent at the end of March when they were dented after the bank's pension deficit increased.
The bank intends to resume dividend payments once it stops counting the preference shares as capital in the first half of 2016.
It said loan volumes stabilised at 85 billion euros and Boucher told Reuters he expected new lending in the second half to beat the 6.5 billion euros advanced to customers in the first six months, which was up 50 percent year on year.