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ISEQ slumps in line with world markets

Monday, March 03 17:36:59

The ISEQ slumped by well over 100 points today in line with the rest of Europe as the crisis in Ukraine sparked market fears.

By 12:30, the ISEQ was down 126.34 points to 5,069.63.

Investors took fright at Russia's military intervention in neighbouring Ukraine today, setting the pan-European FTSEurofirst 300 index on course for its second-biggest daily fall since June. Companies exposed to the region, such as Austria's Raiffaisen Bank International, were among the top fallers. "Investors had underestimated the risks of an escalation in Ukraine, so the events over the weekend are a wake-up call for the market," said David Thebault, head of quantitative sales trading at Global Equities in Paris. Banks were among the top fallers, led by Raiffeisen, which has the largest exposure to Ukraine among European blue chips. Companies with significant exposure to Russia, such as carmaker Renault and brewer Carlsberg, fell 5.9 percent and 5.4 percent.

At home, shares in Bank of Ireland fell 2c to E0.36. Dublin's brokers reacted favourably to Bank of Ireland's full year results this morning saying the reduction in defaulting loans was "encouraging" while its balance sheet looked relatively healthy. "Bank of Ireland has emerged from the Balance Sheet Assessment volatility with its capital ratios in tact," said Stephen Lyons, analyst at Davy Stockbrokers, which forecasts a profit of E540 million this year. "Profit before loan losses is ahead of expectations and loss models seem conservative, which augurs well for capital generation," Lyons said. The bank's underlying loss before tax shrank to E569 million in 2013, from E1.5 billion a year earlier, while operating profit jumped fourfold to a little more than E1 billion. Its net interest margin - a key metric that shows the profitability of its lending - jumped to 2.03 percent in the second half of 2013, meeting its target of 2 percent-plus ahead of schedule. "Bank of Ireland has reported a strong set of 2013 results. Pre-provision profits are ahead of our expectations and capital ratios remain robust, notwithstanding implementation of many of the Central Bank's balance sheet assessment observations. Encouragingly, the bank is now generating capital. It has been one of the top-performing EU banks to date in 2014, gaining 46.8pc after rising 121pc in 2013. At over 2x end-2013 TNAV, the focus at this morning's results briefing will be on potential drivers for further outperformance," Davy said. Eamonn Hughes of Goodbody Stockbrokers said its margin performance, though in line for 2013, augers well for a potential uplift for his estimates in 2014 (2.02pc 2014f and recorded 2.03pc in H213).

AIB shares were flat at E0.14, permanent tsb's rose 1c to E0.11.

Elsewhere, shares in FBD fell 64c to E18.18 after it posted a small dip in pre-tax profits for the full year 2013 but a return on equity of 17.3pc. It said that the profit dip was because of a small number of very large accident and liability injury claims offsetting its strong investment performance. The company said its profit before taxation was E51.5m last year, down E800,000 on its 2012 figure. FBD said its capital base had been strengthened further during the year, with its solvency lever standing at 78.1pc compared to 73.8pc in the previous results. The insurer has also reported an increase in customer numbers, with its market share increasing to its highest point ever at 13.4pc. Commenting on the results, Andrew Langford, Group Chief Executive, today said: "These are excellent results with a profit before taxation of E51.5m and growth in premium, customer numbers and market share in an insurance market that continued to contract. Our strong position and continuing investment in the Irish market, leaves us well placed to progress our strategic plans and to take advantage of market opportunities that arise as the economy recovers. The Board is confident that FBD will continue to outperform its peers in delivering superior returns to shareholders".