* Bank had hoped to resume dividend payments this year
* Keen to see sustained recovery in pension deficit
* Underlying pretax profit falls 11 pct to 1.07 bln euros
By Padraic Halpin
DUBLIN, Feb 24 Bank of Ireland expects
to pay its first dividend in a decade in the first half of 2018,
a year later than hoped as it awaits further clarity on
Britain's vote to leave the European Union, it said on Friday.
Ireland's largest bank by assets outlined provisional plans
a year ago to reinstate dividends alongside its full-year
results for 2016 but warned in July that external factors,
including Brexit, could force a delay.
The bank also said on Friday it wanted to see recent bond
market-led improvements in its pension deficit sustained. Its
initial plan would have made it the first domestic Irish lender
to resume dividend payments since the financial crash.
"From a Brexit point of view, we haven't seen any material
negative impacts, other that the translation impact on our
profits from our UK business," Bank of Ireland Chief Executive
Richie Boucher told Reuters in a telephone interview, describing
the dividend decision as a finely balanced call.
"The pension deficit did stabilise, we don't expect the same
volatility in bond yields as we had in the first half of last
year but we do want to make sure that continues to be the case.
It's probably just a bit of a caution on the bond yield issue."
Bank of Ireland, which has led a return to profitability
across the Irish sector following years of losses, reported an
underlying full-year pretax profit for 2016 of 1.07 billion
euros ($1.1 billion) down from 1.2 billion a year ago.
Shares in the bank, which fell 30 percent last year, were
2.6 percent lower at 0.23 euros at 0815 GMT.
"The lack of a dividend may be a slight initial negative,
particularly in terms of management now guiding on nothing until
next year, but the underlying figures are very strong," said
Investec analyst Owen Callan.
Like-for-like profit was hit by a weaker pound, which cut
the value of its UK earnings. The bank is more exposed to the
country than any other Irish lender but Boucher said he expected
some growth in mortgage lending in the United Kingdom this year.
The bank finished the year strongly with a net interest
margin, a measure of the profitability of its lending, at 2.19
percent versus 2.15 percent in September and non-performing
loans down 34 percent to 9.6 percent of gross loan balances.
Its core loan book rose, led by a 6 percent increase in new
lending in Ireland where it benefited from continued stellar
The bank, which is 14 percent owned by the state, said its
Tier 1 capital ratio rose to 12.3 percent from 10.5 percent
three months ago, helped by a narrowing of its pension deficit
to 450 million euros from 1.45 billion at the end of September.
($1 = 0.9447 euros)
(Editing by David Clarke)