Bank of Ireland continues downsizing of UK business as loan book falls by £800m and customer deposits drop by £500m

Latest figures come as BoI ends AA partnership and cuts UK personal loan offering

Union members at Bank of Ireland are to be balloted on a deal to increase their pay and health insurance cover.
Bank of Ireland UK saw its operating income fall by £47 million in 2023.

Bank of Ireland recorded a pre-tax profit of €1.94 billion (£1.66bn) last year, but the latest annual accounts for the Irish lender show it continued to downsize its UK arm in 2023.

The bank announced overall group profit before tax soared by 92% in 2023, up from just over €1bn in 2022. It plans to return €1.15bn to shareholders on the back of its 2023 performance.

Bank of Ireland’s ‘Retail UK’ division, which includes its Northern Ireland branch network, recorded a pre-tax profit of €275 million in 2023, €40m down on the €305m it recorded in 2022.

The UK arm, which also incorporates its UK residential mortgage business and its finance firm Northridge Finance, saw its operating income fall by £47m (8%) in 2023 to £522m.

The lender said the decrease was due to lower net interest income driven by lower lending volumes.

It was partially offset by the higher interest rate environment, and gains within Bank of Ireland UK’s asset finance business on used cars, namely Northridge Finance.

The annual report published on Monday showed loans and advances to customers within the Retail UK division decreased by £800m last year, falling 4% to £17.4bn at December 31 2023.

Customer deposits stood at £11.8bn at the end of 2023, down £500m (4%) on the £12.3bn from a year earlier.

Its UK business is expected to decline further in 2024 after Bank of Ireland two months ago announced the cessation of its partnership with The AA and cut its personal loan products offered via Bank of Ireland UK and via the Post Office.

“In December 2023, in line with the group’s transformation strategy to be the leading multi-niche bank in the UK, the group announced the conclusion of its financial services partnership with the Automobile Association (AA) and ceased the provision of unsecured personal loan products under the Bank of Ireland UK and UK Post Office brand.”

Bank of Ireland significantly reduced its retail bank branch portfolio in Northern Ireland during 2021, closing 15 branches.

It left the Irish lender with just 13 branches in the north.

Bank of Ireland said around £7m had been invested in upgrading its remaining branch portfolio in the north.

It’s also spending £3m to replace its network of 40 ATMs in Northern Ireland over the next three years.

Meanwhile, the Financial Services Union (FSU) has hit out at Bank of Ireland over a pay award announced on Monday.

The union said despite a framework in place for staff to receive a an award of up to 10%, it said the bank had informed workers they will receive between 2% and 5%.

The FSU’s general secretary, John O’Connell, said: “Today’s announcement of €1.9bn in pre-tax profits shows beyond doubt that Bank of Ireland are back to the boom years in terms of profit margins.

“The FSU want to see a banking sector that is attracting employees who see a long-term future in working in the sector. For that to happen staff need to be rewarded for their professionalism and talent.”