LONDON – The Bank of Ireland said on Friday that it had returned to profit for the first time since a housing crisis derailed the Irish economy six years ago.
The commercial bank, which is based in Dublin, reported net income of 343 million euros, or about $459.3 million, for the six months ended June 30. That compared with a loss of €463 million in the period a year earlier and was ahead of analysts’ expectations.
An improved economic outlook in Ireland and Britain has bolstered the bank’s results, Richie Boucher, chief executive of the Bank of Ireland, said in a statement on Friday. Ireland’s gross domestic product this year is expected to grow 2.8 percent in 2014 and 3.8 percent in 2015, the bank estimates.
“The favorable economic outlook and the strength of and the momentum in our Irish and our international businesses gives us confidence in our ability to deliver attractive and sustainable returns for our shareholders,” Mr. Boucher said.
The Bank of Ireland is the largest lender in Ireland and remains partly owned by the government after a bailout during the financial crisis.
The bank’s positive quarter comes amid a general improvement in the Irish banking sector.
The state-owned lender Allied Irish Bank and Ulster Bank, a unit of the Royal Bank of Scotland that operates in Ireland and Northern Ireland, also have returned to profitability.
On an underlying basis before tax, the Bank of Ireland reported a profit of €327 million, compared with a loss of €395 million in the first six months of 2013.
David Lock, a Deutsche Bank analyst, said in a research note on Friday that the four central issues contributing to the results were loan growth, margins, asset quality and capital. On all of these, he said, the Bank of Ireland “came in ahead or in line with forecasts.”
“Over all, these are a good set of numbers, a beat to our forecasts,” Mr. Lock said.
Excluding the cost of guarantees by the Irish government, net interest income – the measure of what a bank earns on its lending after deducting what it pays out on deposits and other liabilities – rose 20 percent to €1.16 billion in the first half, up from €968 million.
The government guarantee, which protected bank deposits over €100,000 and was known as the Eligible Liabilities Guarantee, ended in March 2013 but still applies to some deposits.
In the first six months of the year, government guarantee fees paid by the bank declined to €21 million, down from €99 million in the same period in 2013.
In the first half, provisions set aside for delinquent and defaulted loans fell 43 percent, to €444 million from the period a year earlier.
The bank said that its reduction in loan provisions reflected an improved economic environment, a recovery in property markets and its efforts to support viable customers who are facing financial difficulty.
Royal Bank of Scotland said separately in a disclosure on Friday that a coming Scottish referendum on independence could have a “material adverse effect” on the bank and its operations.
R.B.S. and other financial institutions with large operations in Scotland have generally avoided comment on the independence vote, which is set for September, saying it was up to the Scottish people to decide.
“Although the outcome of the referendum is uncertain,” R.B.S. said, “subject to any mitigating factors, uncertainties resulting from an affirmative vote in favor of independence would be likely to significantly impact the Group’s credit ratings and could also impact the fiscal, monetary, legal and regulatory landscape to which the group is subject.”