Lender says it has extended loan breaks to 86,000 customers in Ireland and Britain

Bank of Ireland slid into a loss in the first quarter as the Covid-19 crisis led to the group taking a 266 million loan impairment charge and racking up an additional 155 million hit as stock and bond market volatility affected its wealth and insurance business and financial assets.
The combined 421 million impact resulted in the bank posting an underlying pre-tax loss of 235 million for the quarter, it said in a trading update on Monday.
Bank of Ireland has extended loan payment breaks to 86,000 customers in Ireland and Britain since the middle of March. While the lender has not yet seen a material increase in individual loans running into problems, it took a large impairment charge in anticipation of a surge in bad debt as the economy has deteriorated sharply in recent months.
The bank warned that loan charges are set to increase as the year progresses, with new lending for 2020 possibly coming to between 50 per cent and 70 per cent of 2019s figure of 16.5 billion, and business income falling as much as 40 per cent as a result of reduced economic activity.
We made a good start to the year growing lending, selling more than a quarter of all new mortgages in Ireland, reducing costs, and with the lowest level of arrears of any Irish bank. However, right now everything is seen through the lens of Covid-19, said chief executive Francesca McDonagh.
The economic outlook for our core markets in Ireland and the UK has deteriorated, with reduced levels of activity across our businesses. The economic effects will have a material impact on the groups 2020 financial performance. The full impact remains uncertain and will be driven by the duration of Covid-19 restrictions and the successful reopening of the Irish and UK economies.
Bank of Irelands trading statement marks the start of a busy week for Irish banks, with AIB, Permanent TSB and KBC Bank Ireland each set to report on the initial impact of Covid-19 on their figures over the coming days. Ulster Bank has already reported that it took a 32 million net loan impairment charge for the first three months of the year.
Bank of Irelands deposits rose by 1.8 billion to 85.8 billion as nervous customers put aside money during the quarter. This contributed to the banks net interest margin the difference between the average rates at which it funds itself and lends on to customers contracting by 0.03 of a percentage point to 2.07 per cent as lenders face negative rates of as much as minus 0.5 per cent for excess funds placed with the European Central Bank (ECB)
The banks loan book grew by 100 million to 79.6 billion, with net lending growth of 1.5 billion largely offset by currency movements.
The banks actual level of non-performing loans level fell by 100 million to 3.4 billion over the course of the first quarter, resulting in an non-performing loan ratio of 4.2 per cent.
The banks common equity Tier 1 ratio, a keenly-followed gauge of reserves that are there to withstand a large shock loss, fell by 0.3 of a percentage point to 13.8 per cent during the quarter on account of the bank falling into loss-making territory and continuing to grow its assets base through new lending.
Still, the banks minimum regulatory capital requirements have fallen by 2.15 percentage points to 9.27 per cent as regulators in Britain, Ireland and the ECB eased rules for banks to help them navigate the economic shock brought on by the coronavirus pandemic.
The bank said that it expects its capital levels to remain above the previous minimum CET1 requirement of 11.45 per cent this year, even as it takes into account its weakened outlook.