Bank of Ireland has said the “severe” impact of COVID-19 has had a big effect on its financial performance and outlook.

In its first-half results, the bank reported a pre-tax loss of €669m, as it took a €937m charge to deal with the effects of the pandemic on its business.

Uncertain

Measures to keep its activities going and comply with public health guidelines during the pandemic also cost the bank €12m.

“The longer-term impacts of COVID-19 on the economy and the group's financial performance remain uncertain,” the bank said.

Payment breaks

The impairment charge of €937m included €184m linked to more than 100,000 loan payment breaks in Ireland and the UK. It also included €321m of loan losses during the period and €432m to cover the potential effects of a weaker economic outlook.

The bank’s total income fell 14% from a year earlier, with income in its Irish retail banks dropping by 20%. Total new lending slumped by 19%.

Falls

“While aspects of our outlook are more positive than when we presented our Q1 trading update and we expect further economic recovery in the second half, we continue to expect large falls in gross domestic product and employment in both Ireland and the UK compared to 2019,” said chief executive Francesca McDonagh (pictured).

She also said Bank of Ireland was working closely with government and its small business customers on the provision of COVID-19 guaranteed lending schemes.