Bank of Ireland shares

Any recommendations i have about a 1000 euro value in these shares i just want to sell them now havent bought shares in ages just found this old cert, i bought these a few years ago, so its old fashioned paper certs, seems if i open an account now with a stockbroker there arent many around and im charged 98 euro for the cert been lodged with them also a yearly fee of €200 i dont intend to keep the account open that long maybe a few weeks, and i have to have €500 in the account.

Id appreciate any advice on the best way to sell these shares with minimal expense thanks

Computershare is BOI’s Registrar. It might be worth contacting them and asking if they are aware of any program for disposing of small numbers of shares - I've come across such programs in the past which are intended to reduce the number of "trivial holdings" and eliminate the associated costs.

I don't see it on the Ask About Money Best Buys. Not in the Instant Access accounts. 0.5% is available with 30 days notice. For clarity I mean the sort of "overnight" money where you can withdraw up to €3,000 a day with no notice from the NTMA "Post Office Savings Book". But the penalty for such instant access is a 0.05% interest rate, subject to DIRT.

https://www.askaboutmoney.com/threads/savings-best-buys.90481/

The Minister was asking customers to move €140 billion earning nothing in current account type products into interest bearing products. BOI want their customers to do that with their share of that €140 billion. It would be more straightforward if they would just pay say 2% instead of 0.1% on that money. They have the use of the money anyway, the same as the money in other accounts.

"For Demand Deposits, interest rates will be increased to 0.10%, from 0%.

"I would encourage customers to switch their money from their current account to a savings or deposit account where they will benefit from interest payments," Ms Russell said."

What dividend is expected this month. The froth seems to have dissolved on this share recently.

Dividend tripled to 60 cent in 2023.

If you dont see through the noise here - your crazy - they reported almost outrageous loan loss provisions on CRE......I cant help but think that it was done to ensure PBT dipped below €2bn....the PR around such a number would have been crazy......and no banker ever lost his job taking too many provisions and writing them back later!

But also listen to the call and take a step back here - 60c per share dividend for 2023 to be paid in the next few months (likely May) and resumption of interim dividends this year also (lets guess ~30c per share in August)......so 90c of dividends per share on stock price of what €8 euro........so ~11%+ dividend yield in the six months......but then throw in the buybacks........€475mmm+++......another 5%+ distribution

After that you've got a 15% RoTe business in a dupoly baking market - trading for what 0.8 TBV today.......so really something like mid-teens return on capital via share price paid cause you arent even paying book here.

I get the skepticism when a bank reports higher provisions/lower NII than expected..... but the reality is that BOI is just a killer deal at these levels

It's up now.

But, the 12 month trend has been downwards. There is support at €8.00 and then at €6.00. But, no technical indicators are saying buy. That said, the share buyback may underpin the price. We shall see.

D.

Share price movements in the short term explain nothing about the underlying value of the business long term...I never try to explain short term moves who the hell knows.........folks in the stock expecting a €2bn PBT perhaps bailed....algos saw commercial real estate in the press release and programmatically bailed

Look at the math though - 60c dividend......indication of a 2024 interim dividend likely after buyback deployed....so I think 30c DPS on interim is likely....so a holder of record today buys a duopoly bank in a totally consolidated market that's indicating RoTE guide of ~15% 'through the cycle'...buying it today at a 20% discount to that tangible equity....for something like a late teens ~18% return on early March share price paid....with that company based on 8.16 share price likely to send you out in the next 9 months about 0.90c per share in dividends....for a 2024 dividend yield of about 11%.....while also shrinking the shares outstanding via €520m buyback or another 6% capital return to the shareholder.......so 17% total annual return.

Finally their NII guide (in conjunction with the CRE loan loss) is a deeply conservative one...this is a mgmt happy to sandbag.....I'm not sure the ECB is going to be as aggressive in their cuts as BOI has modelled.....I'm not sure CRE is going to turn out as bad as provisioned for (15% loss).

Put simply BOI is likely to return capital to shareholders in the next 9 months equal to about 17% of its market cap today via a mix of buybacks and dividends (mainly dividends)......great.......one year is one year....the question is around the sustainability of those returns........well someone explain to me two things that bust the thesis (1) explain to me another institution with a lower funding cost than BOI (outside AIB) from which to make loans (mortgage, car, personal) in the Irish market (2) explain to me a situation that might arise in the near future that would see that funding cost duopoly be eroded and/or the loan book degrade in an excepted fashion.

I just dont see it - BOI - settles out IMO at a valuation of about ~1.3 TBV with an ordinary dividend yield of about 3-4%.....and an opportunistic average buyback that shrinks s/o by about 4% per year.

The only bad thing I'll say about BOI which must be ackowlendled - growth is limited, UK exposure is a gift and curse while Ireland beta is almost 100%.

I see that AIB have published a profit figure of €2 billion. After tax. I haven't heard or seen any crazy PR about that. I think the idea that BOI manipulated their numbers to go below €2 billion to avoid crazy PR is a bit crazy.

"IRISH BANK AIB has announced that it intends to distribute €1.7 billion to shareholders after reporting a post-tax profit of over €2 billion.  As interest rates rose, AIB’s net interest income rose from just over €2 billion in 2022 to €3.8 billion last year – a jump of 83% – due to the “changed interest rate environment and higher average customer loan volumes”.

Straight out the gates I'm going to take your dig with a grain of salt - cause your lack of knowledge is kind of obvious - BIRG stock price is €8.xx.....BIRG met the technical definition of a penny stock post the GFC...the reverse share split in 2017 collapsed the s/o and firmly removed them from any definition of a penny stock.....but the real hint is in the name 'penny'... stocks that trade, ya know, in pennys/cents...not euros or dollars. I also broadly define penny stocks another way to mean stocks with nano mkt caps in the single millions/ 10's of millions. Not companies with billions of dollars of mkt cap....which BIRG mainly was even when its underlying shares - due to dilution - were trading for 'pennys'...those pennys multiplied by shares outstanding added up to an enterprise worth at its worst hundreds of millions or biilions. Again you've failed your 'penny' stock moniker even back then..

So yeah BIRG meets none of the hurdles that could justify your two references to it as a penny stock......I'm going to guess from your handle that perhaps your possibly a 2007 vintage BIRG shareholder and have PTSD - which I completely understand.

Secondly my investing record now stretches for a decade - I run a concentrated portfolio of 8 to 10 names. My CAGR over that period is ~18% p/a. The portfolio looks nothing like SPY or QQQ. It does not include 'hot' retail names. The portfolio record is not dominated by say taking a 80% allocation to tesla/btc in 2014 and holding it. It has idosyntatic ideas which I source myself.

Untangling luck and skill in investing takes time.......investing is full of people who were lucky 'one time in a row' or two times in a row....(unlucky too so they give up)...being lucky over a 10yr period over numerous situations & positions and outperforming the indexes would suggest (but not irrefutably prove) I have some skill.

On your Landesbank comment and lack of understanding of the banking sector - I'll simply say this.....that I consider Banks to be about the most dangerous type of stocks in the world (outside meme stocks)......you in effect own the bank on margin....less so since the GFC when CET1's of 5% were common....but in effect BIRG has a loan book that is 8 times the size of its shareholder equity......so given the loan portfolio is held with a thin sliver of shareholders equity........investing mistakes in banks are effectively punishable by quick and speedy falls in equity prices of 80-100%. Just ask the NYCB holders..you can lose 90% of your money investing in a bank that held predominantly NYC apartment buildings....for that reason I dont get 'mentally' on airplanes to look at them elsewhere. I invest in banks where I know and live/workin the environment I'm based in. That shrinks my bank investing universe to really the UK, Ireland and the USA where I have some hope of a view on the value or otherwise of what's likely held inside a banks loan book (principally real estate but then consumer loans) and the macro/regulatory environment too.

I dont take credit/margin/leverage risk (remember these things are levered 8 to 1) and then layer on top of that currency risk like you seem to be willing to do with LLB but really what your layering on is language/cultural/insight risk. You seem like a guy then that I see investing the whole time - you think by studying a thousand things you can know a thousand things. My strength is I know what I dont know and what in some sense I can't ever know. Studying a bank in Liechtenstein would be an example where I wouldn't take 10 seconds out of my day to look at it no matter how cheaply it screens on a RoE, P/E, P/TBV basis. There are simply things you can never know and certainly not know enough to have the fortitude to hold if/when they fall in an extreme fear based drawdown.

I have two rules for investing in banks outside of the above 'home' country/cultural understanding rule . The first rule is that I care principally about the funding cost of a bank (deposits) before I even think about the asset side of the bank. Money is a commodity. In commodity businesses, broadly, the low cost producer wins. The person with the lowest funding costs (deposits) is the best positioned and most likely to make the most sensible loans. The man with high funding costs requires both higher loan rates which in effect doom them to 'reach' for riskier loans. This sums up the Irish market - a challenger to the AIB/BOI dupoly would need to charge higher underlying rates or take on riskier credits or BOTH!. I despise banking markets like much of Europe where competition for deposits and so unprofitable/risky loan making abound. Secondly I like my banks boring and conservative but MOST important and this goes directly to the Landesbank reference I have to UNDERSTAND the regulatory and competitive environment in which they operate. If you like following ideas in different languages I wish you good luck with that. I wouldn't cross the street for an extra 5% of bank RoE if it involved five seconds using google translate to understand a sentence of something I need to understand such that I can come up with a view to its intrinsic value.

I look forward to coming back when BIRG trades up to something approaching its fair value which IMO is ~1.3x TBV.....I have no idea when the marginal buyer of BIRG stock will pay that.....but based on the results, the nature of the Irish banking market becoming outrageously consolidated and the fact we aren't likely not going back to ZIRP and BIRG is returning to life as regular sustainably through the cycle dividend payer......my bet is its relatively soon (but nothing is certain).... IMO BIRG provides an adequate return via dividend distributions while I wait for capital appreciation in the stock and decide to sell, pay my cap gains and look for an opportunity with a higher expected return.

For now BIRG meets my estimated 3yr fwd TSR hurdle of ~15% or greater which warrants continue holding in the portfolio. In fact I've pegged the TSR somewhere north of 22% p/a 'if' the market trades the shares closer to 1.3TBV and they buyback 6% of s/o in the next three years....much of the return will come via dividends with high visibility IMO. The icing on the cake will be further sp appreciation.

Yep the underlying RoE strength is there, the sustainable moat is there, NPL's are 'fixed', interest rate hedges are in place, loan loss provisions are adequately even conservatively provisioned. If/when we get a recession - I think the underlying strength of the banks here will surprise and will certainly change the perception and invite in the natural holder of the stock.

Sure a recession comes along and you get depressed earnings due to higher losses on the loan book - but the reality is the loan books in the domestic banks are underwritten to extremely prudent standards with low LTV's. The mortgage book IMO is about as rock solid as one could expect in a world where the unexpected can happen. Everybody is always fighting the last war - i think a recession would nearly be a postive catalyst for BIRG such that this enhanced resiliency could be demonstrated.

My point about the fwd strength of the banks balance sheets and earnings power through a downturn is again something which would bring the natural shareholder back to the table....these aren't your grandfathers 2008 banks type thing......in some respects a confirmed recession, if the banks perform admirably during it, will be a catalyst to their re-rating from a multiple perspective as the natural holders begin to think of them again as safe, reliable through the cycle dividend payers.

On the hedging aspect I think your right - unexpected and violent upside on rates and they had a windfall......but BIRG has been conservative in taking some of that windfall and buying hedges to downside on rates so they aren't totally exposed on the way down now either.......but in some respects hedging or no hedging....I dont own BIRG such they do an excellent job forecasting interest rates and so running an effective macro hedging program....this is not the game of owning these banks....the key to sustainable RoE through the cycle is the change in their competitive position in the Irish market (married to my macro view on a non-return to ZIRP).....their deposit franchise/funding costs are unmatched.....so its a question of how much competition exists on the asset side such that AIB/BIRG can price product, mainly mortgages, in a way that generates NIM's of sufficient spread to get to 15% RoE targets. Whats clear in my mind even during this rate cycle is the funding cost piece....the deposit beta of BIRG's liabilities has been exceptional.....and so their ability along with AIB to set marginal pricing in the Irish market for mortgages (absent real competition) is exceptionally strong.

It staying as perfect as it is today for AIB/BIRG is dependent on a non-return to ZIRP.....such that non-bank lenders dependent on the capital markets have significantly higher funding costs than the duopoly players and so are forced to play in niches or at higher pricing.

From here IMO the thesis gets blown by a wave of new bank entrants to Ireland via actual regulatory entry or some version of capital markets union dream. Likewise the rise of neo-banks getting into the mortgage space in a big way.

50% ltv mortgages have significantly higher repay rate in times of distress

120% ltv mortgages as we found out in gfc are the problem and drive npls through the roof