Bank of Ireland has this morning published it report and accounts for 2010 and given we own 36.5% of that bank, we might be grateful that its losses have come in at less than €1bn. The bank reported a net loss after tax credit of €609m for 2010, down from €1,469m in 2009. Losses on loans totalled €4.5bn, up from €4.1bn the previous year and comprised NAMA losses of €2.5bn and non-NAMA loan losses of €2bn. The concern on here has been for some time that BoI is not adequately assessing losses on non-NAMA loans – this is because of a limited number of public foreclosures which showed 80%+ losses, that smaller property loans seem more impaired than the bigger ones absorbed by NAMA and because of credible claims about BoI’s credit and lending practices being every bit as bad as AIB’s and Anglo’s in some instances. Overall though, BoI will be pleased with its loss being contained below €1bn.
Elsewhere it appears to have a loan to deposit ratio (LPR) of 175% and will need to dispose of €35bn of loans if it is achieve a 122.5% IMF/EU bailout target for deleveraging by 2013 though these calculations will get muddied if it takes over Irish Life deposits. The bank does not indicate how it will raise the €5.2bn capital identified in the stress tests two weeks ago. I would say it was 50-50 that it can be raised privately in a way which allows BoI to remain outside Government control. On the face of it, the bank is the healthiest of the domestic banks and Ireland is still a relatively rich country by reference to both per capita GDP and GNP. The bank has an established presence with large network of branches and good corporate and international units. Its net interest income for 2010 was €2.2bn, up €0.1bn from 2009.
The report is nearly 400 pages long & there should be further analysis on here later this week.
NAMA Wine Lake 
The Bank of Ireland has a ‘big ask’ on its deleveraging programme. On page 14 of its Annual Report, it describes its €30 billion disposal programme over the next 32 months. It also implies that the nominal value of these portfolios is €39 billion, suggesting a 24% discount to par. While this discount might appear conservative (BoI obviously thinks it is conservative), there are two caveats. First, a significant portion of loans are property and construction and second, the coupon on all of these loans is probably well below current market rates.
I would consider €30 billion in proceeds from these assets as a heroic assumption and highly unlikely within 32 months. But, hey let us just trust them.