Investing in Bank of Ireland

Interested in food

Bank of Ireland will have to significantly increase its debt provisions in the coming weeks, they are about to convert Government held preference shares to shares held by institutions as opposed to a rights issue. They will then buy back the Government preference shares reducing their overall liability. They have less and less competition in the Irish market. Are they a good investment?

euroboom13

In the future they will be a very good investment ,but at the moment ,they are just about the best gamble since shergar.(so if they stick round longer than he did, they'll win everything) odds are they will..... but not an investment as such, just yet

Sonnenblumen

euroboom13 wrote: »

In the future they will be a very good investment ,but at the moment ,they are just about the best gamble since shergar.(so if they stick round longer than he did, they'll win everything) odds are they will..... but not an investment as such, just yet

84mio shares traded today, so someone has some perspective?:cool:

floyd.pepper

I bought last Friday. Should be a good long term investment, I'm planning to hold them for quite a while.

euroboom13

Interesting few weeks ahead. Stabilizers coming off ,few wobbles and then ,freedom

Value Hunter

They are massively overvalued

Here's a previous post of mine explaining why

Value Hunter wrote: »

Fair enough, i'll explain my viewpoint in greater detail

1. This is not a business in growth/recovery mode. Operating income has declined every single year since 2010. Its on track to be 40% lower for 2013 than in 2010. With revenue constantly declining alongside it, this is not a business where profits will grow.

2. BOI have recorded impairment charges of €12.38 Billion since 2010. We all know bad loans haven't begun to be tackled properly yet.

My view is if they've recorded over a €12 Billion loss so far, who knows how high it can go when their forced to actually tackle defaulting mortgages.

Would €15 - €20 Billion be beyond the realms of possibility? More?

Even a €5 Billion impairment charge will likely devastate the share price

3. The current improvement in performance has almost exclusively being attributed to cost cutting/branch closure and (credit where its due) to improving the cost of interest expense.

Both these measure have limitation which are almost reaching saturation point.

4. Its current valuation is massively overvalued. People buying at this level are purely speculating. Yes they make make a 50% return in 3 months. Hurricane Fly might also make me a 50% return in 10 minutes at Cheltenham next year. Doesn't make it an investment.

5. The use of tax credits from their previous proits will run out eventually. This will adds hundreds of millions to their costs every year.

6. Why would you invest in BOI? There is so much better options out there. Royal Bank of Canada has a 4% dividend, trades at just 12 times earnings and has revenue growing around 4% and profit growing around 15%.

I think BOI management have been very clever. They've fought tooth and nail to avoid acknowledging write downs. This has given them time to implement cost cutting and to improve their interest margins. This will allow them to return to a very small amount of profitability within a year, giving the false impression of a recovery.

Believe me, this return to profitability will be very short lived. Once write downs start to occur, profitability is going to be a distant memory and the share price is going to get hammered.

]


For point number 2, just note that the central bank have just announced that BOI are likely to have yet another impairment charge of €1.4 billion

There will be more massive losses to come as bad loans get tackled

euroboom13

losses can be off set against future profits
Bad morgaged back loans still have hugh value,50% in most cases
10% of loans in trouble,that leaves a capitol loss of 5%(if all 10% are liquidated)

100% loan book collaspe as your figures points to ,is misleading,


figures can easily mislead,especially when you compound them.

eitherway i am happy and fearless with this one!
But it is a gamble as you say,not an investment yet.

wenxue

euroboom13 wrote: »

losses can be off set against future profits
Bad morgaged back loans still have hugh value,50% in most cases
10% of loans in trouble,that leaves a capitol loss of 5%(if all 10% are liquidated)

100% loan book collaspe as your figures points to ,is misleading,


figures can easily mislead,especially when you compound them.

eitherway i am happy and fearless with this one!
But it is a gamble as you say,not an investment yet.

I trust BoI!

lucky john

Bought again today. I am under no illusion as to what the risks are with boi. Its a long term gamble but one with reasonable odds on making a few euro on over time.

Interested in food

Great insight and very useful. Thank you. After €1.3bn additional impairment charge today share price only fell 3%. This looks like a positive market response. Does this make it a better proposition? I will also take a good look at Royal Bank of Canada?

Value Hunter

Interested in food wrote: »

Great insight and very useful. Thank you. After €1.3bn additional impairment charge today share price only fell 3%. This looks like a positive market response. Does this make it a better proposition? I will also take a good look at Royal Bank of Canada?

A fall of only 3% shows the stupidity of the market for this stock.

With a valuation just north of €8 billion this write down as a percentage of the companies value is around 16%. Lets not forget they'll be further charges down the line

Using the same ratio, imagine if Bank of America announced an impairment charge to its shareholders totaling $26.5 Billion!! The CEO would be sacked and the the share price would crash. With BOI its seen as a positive :pac:

Fools who don't understand share dilutions are causing BOI rise, they look at a chart and see it was €18 and now is €0.27 and think how can they lose?

The big guys are selling, that should tell you all you need to know

You can look at almost any other stock, there's literally hundreds of thousands of public companies worldwide. Your not actually oblidged to invest in BOI, some people here seem to think its the only game in town

euroboom13

Value Hunter wrote: »

A fall of only 3% shows the stupidity of the market for this stock.

With a valuation just north of €8 billion this write down as a percentage of the companies value is around 16%. Lets not forget they'll be further charges down the line

Using the same ratio, imagine if Bank of America announced an impairment charge to its shareholders totaling $26.5 Billion!! The CEO would be sacked and the the share price would crash. With BOI its seen as a positive :pac:

Fools who don't understand share dilutions are causing BOI rise, they look at a chart and see it was €18 and now is €0.27 and think how can they lose?

The big guys are selling, that should tell you all you need to know

You can look at almost any other stock, there's literally hundreds of thousands of public companies worldwide. Your not actually oblidged to invest in BOI, some people here seem to think its the only game in town

Yes there is a dilution but the main issue is removed completely ,making the share stronger when dust settles.. and I think you will see the big guy participate, not bail ,as you dictated..... is a small guy putting up the 1.3b...

Another one sided Armageddon report

euroboom13

Interested in food wrote: »

Great insight and very useful. Thank you. After €1.3bn additional impairment charge today share price only fell 3%. This looks like a positive market response. Does this make it a better proposition? I will also take a good look at Royal Bank of Canada?

Canada has a massive property bubble and building boom,i don't know much about bank but would tread carefully.

Value Hunter

euroboom13 wrote: »

Yes there is a dilution but the main issue is removed completely ,making the share stronger when dust settles.. and I think you will see the big guy participate, not bail ,as you dictated..... is a small guy putting up the 1.3b...

Another one sided Armageddon report

What?

What main issue is removed completely?

small guy putting up the 1.3 b?? what? Its an impairment charge, that means the bank is writing off 1.3 billion as a loss, no one puts it up

One of the major investors sold their entire holdings recently. Hardly a sign that its the time to buy.

I think i've been very open minded and fair with regards to BOI, their becoming more efficient and increasing their margins which speaks greatly for the management, its just their stuck with a legacy from the crash which still hasn't been resolved. Until that is completely resolved their not worth 10c a share let alone 27 (or 60 as some people are buying and holding/hoping for)

If they get hit with another 2 or 3 billion in write downs, what do you think is going to happen?? most like another major dilution wiping out shareholders massively.

It could very easily drop 80% with another write down. There is only so much they can take

euroboom13

Value Hunter wrote: »

What?

What main issue is removed completely?

small guy putting up the 1.3 b?? what? Its an impairment charge, that means the bank is writing off 1.3 billion as a loss, no one puts it up

One of the major investors sold their entire holdings recently. Hardly a sign that its the time to buy.

I think i've been very open minded and fair with regards to BOI, their becoming more efficient and increasing their margins which speaks greatly for the management, its just their stuck with a legacy from the crash which still hasn't been resolved. Until that is completely resolved their not worth 10c a share let alone 27 (or 60 as some people are buying and holding/hoping for)

If they get hit with another 2 or 3 billion in write downs, what do you think is going to happen?? most like another major dilution wiping out shareholders massively.

It could very easily drop 80% with another write down. There is only so much they can take

!the 1.3b is being sold to large private investors ,not written off?????
Facts please ,not fairytales

roro2

Lads, lads, lads.

Monday - Central Bank wants BOI to increase provisions by €1.36bn.
Today - €1.3bn is being raised from a bond sale (+€580m in equity).

Unrelated.

euroboom13

Seems like no rights issue ,only a firm placing at 26 which is completed today!who bought what?.Its revealing like a murder mystery.glad i am in!

Very interesting few days ahead!

euroboom13

results of placing out......2.23b shares placed at 26c...........7.4%

Interested in food

Ok, so they diluted the stock by €500m through a private placement. They raised €2bn in debt to pay back the government. The stock falls by only 3.85%. Why is it so resilient?

euroboom13

Interested in food wrote: »

Ok, so they diluted the stock by €500m through a private placement. They raised €2bn in debt to pay back the government. The stock falls by only 3.85%. Why is it so resilient?

Large investors have bought in 26c, giving confidence
Company has removed preferences share problem,
Large investors have agree to refinance 1.3b of debt at a smaller interest rate,
Worldwide exposure, not to mention being named best Forbes country to do business,
Management are systematically removing all hurdles!!

Bluetulips

I just wonder if they are a good long term investment, for a small investor,since they are talking of issuing shares to raise funds. Also who buys premium bonds

euroboom13

Bluetulips wrote: »

I just wonder if they are a good long term investment, for a small investor,since they are talking of issuing shares to raise funds. Also who buys premium bonds

You need to judge that question for yourself, no ones going to give you free ride, every investment has risk. That's what makes the return ,your own opinion of the risk.

Your next question isn't answerable either, who buys anything?
Good luck.

Bluetulips

Sorry Question was badly worded. I meant is it large investors, institutions etc. who buy premium shares.

Value Hunter

Bluetulips wrote: »

Sorry Question was badly worded. I meant is it large investors, institutions etc. who buy premium shares.

I'll make it easy for you mate, don't buy

Interested in food

euroboom13 wrote: »

Yes there is a dilution but the main issue is removed completely ,making the share stronger when dust settles.. and I think you will see the big guy participate, not bail ,as you dictated..... is a small guy putting up the 1.3b...

Another one sided Armageddon report

Now that they have declared their impairment risk (or most of it depending on your perspective) diluted their shareholding and reduced both the cost and shareholding of the government are they poised for growth given the lack of competition in the market.

euroboom13

Interested in food wrote: »

Now that they have declared their impairment risk (or most of it depending on your perspective) diluted their shareholding and reduced both the cost and shareholding of the government are they poised for growth given the lack of competition in the market.

Yes I understood the question... what do you think!

Interested in food

euroboom13 wrote: »

Yes I understood the question... what do you think!

The rational part of me says to stay away from something as poor as BoI. Unprofitable, under capitalised, no div, declining with further risk of impairment.......the investor in me says that in a market in growth, with no competitors, a strong management team and no real risk of new entrants it is likely to be an ok long to medium investment.

Sonnenblumen

Interested in food wrote: »

The rational part of me says to stay away from something as poor as BoI. Unprofitable, under capitalised, no div, declining with further risk of impairment.......the investor in me says that in a market in growth, with no competitors, a strong management team and no real risk of new entrants it is likely to be an ok long to medium investment.

Smells like growth, profits and divis!

Interested in food

Sonnenblumen wrote: »

Smells like growth, profits and divis!

Yes it does.

corkoian

The only thing that worries me about BOI is how diluted the shares are. Was told by a stockbroker the other day that 0.25c is the same as €25.00 in the boom. In other words if the shock wasn't so diluted it would be at its peak right now

Interested in food

corkoian wrote: »

The only thing that worries me about BOI is how diluted the shares are. Was told by a stockbroker the other day that 0.25c is the same as €25.00 in the boom. In other words if the shock wasn't so diluted it would be at its peak right now

On August 10th the Indo had an article that stated that at 40c BoI would be valued at its pre recession peak allowing for dilution. Given the further dilution last week your stockbroker may be right. Today they have 30.1bn shares in issue at 0.26, (€7.8bn) in roughly the same day in 2007 they had 0.99bn at €10.20. The stock is more than 30 Times diluted, so the like for like evaluation would be 0.335, if its future earnings prospects were the same as 2007. If you take different dates you get different results but the dilution issue highlited above by you and other contributors is a huge issue.