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ISEQ much lower-Bank of Ireland reviewed

Thursday, February 21 09:26:09

The ISEQ is much lower this morning at 3,638, down 41 points from recent highs as markets seem to be in reflective mood following indications that Central Banks are at the peak of their intervention levels and the trend is toward less support from now on. There are also indications that China is tightening money supply in response to property prices and commodities are under pressure from all of the above and indications that a major hedge fund is selling substantial positions in oil and other commodities. Could we be looking at just a blip or is this more fundamental?

NCB Stockbrokers has a substantial review of Bank of Ireland today and here is a brief summary:

We expect the positive trends on the capital, funding and profitability fronts signalled in its November IMS to have remained intact, given macro developments since then. However, over the coming months, there are a number of significant events for the group to navigate. This discursive piece sets out a roadmap to help investors track these key milestones.

We identify six key events that will have a significant impact on BKIR over the coming months - these are: (i) The removal of the ELG scheme; (ii) The next round of PCAR stress tests; (iii) The implementation of new personal insolvency legislation in Ireland; (iv) Compliance with PLAR liquidity targets; (v) BKIR's response to the 25pc redemption step-up in its E1.8bn of preference shares; and (vi) The impact of Basel III.

Our view is that BKIR is on the road to recovery, aided by an improving economic backdrop, and once clarity around the 'known unknowns' detailed above is provided, attention will in turn re-focus on what is a clear recovery play on the re-emerging Irish economy according to NCB Stockbrokers