Bank is tripling its payout to investors after €1.9bn profit
BANK of Ireland is tripling its payout to investors after making record profits of €1.9billion last year.
Yet despite the bumper profits, it paid just €19million in tax last year – the equivalent of just 1% – sparking calls for the bank levy to be increased.
BoI also raised returns to shareholders for the second successive year, as higher interest rates on the back of European Central Bank increases helped it to nearly double its full-year profit.
It will pay €634million in dividends to shareholders and also announced a €520million share buy-back programme.
However, the taxpayer will not enjoy any of the payout as the Government has sold off its stake in the bank.
The Government bailed the bank out to the tune of €4.7billion after the financial crash, but sold the last of its shares in September 2022.
Despite the strong profits, shares dropped nearly 11% yesterday morning as the annual results fell short of market expectations.
Also, Sinn Féin finance spokesman Pearse Doherty pointed out that the bank paid just €19million tax on the profit, which is an effective rate of just 1%.
Corporation tax of 12.5% on €1.9billion would be expected to net €237.5million, but the bank would have deferred the profits against losses in previous years to cut its tax bill.
Asked if the banks’ financial health was ‘good news’ for the economy, Deputy Doherty told RTÉ: ‘Well it’s definitely good news for the shareholders of the banks because as we see from Bank of Ireland, there’s about €1.15billion going to be paid back to shareholders either through dividends or a share buy-back programme, and the State is no longer a shareholder in that bank so we don’t get any of those dividends.’ He said that ‘we carried the bank during the harsh times and now the profits will be garnered by other private individuals’.
‘We want profitable banks in this State, because that allows for additional capital and additional lending in the economy,’ he added. ‘But we also want a banking system that is fair and treats its customers with fairness in relation to the rates that it’s charging.
‘Bank of Ireland made nearly €2billion profit last year. That’s a result not of huge innovation but of the ECB interest rates that have been happening since July of 2022.
‘Because the Irish have so many deposits with banks, the Irish banks were benefiting more than any other European
banks in terms of interest rate hikes. But you needed to make sure the banks pay their fare share of tax in any given year. And the reason it’s just €19million is because they have carried forward losses which happened at the time of the Celtic Tiger.’
He said the bank has been ‘significantly profitable for a number of years’, adding: ‘We are out of kilter in relation to carrying forward losses. If that was in Britain, they’re not allowed to carry forward a 100% of losses, they’re only allowed carry forward 25%.’
The bank levy was more than doubled in the Budget last year to more than €200million, but Sinn Féin wants it doubled again to €400million.
Changes were made to the bank levy in the Budget last October, according to Minister for Public Expenditure Paschal Donohoe.
Minister Donohoe said the changes were made ‘to ensure that a broader group of financial institutions in our country will be paying back to the State a higher level of contribution, and the State, because it is still a shareholder within AIB, will benefit from any future dividend payments’.
‘Not a result of huge innovation’