Mr. Sean Farrell:

I thank the Chairman for the opportunity to address the committee today and outline how we in Bank of Ireland are supporting our agricustomers in this very challenging year. When we were here in May we advised that agriculture was our largest stand-alone business sector and that we are committed to meeting our customer's needs across all enterprises and this remains very much the case. We noted at that time that investment appetite among our customers had been affected by the challenging weather this spring and that we had yet to see significant increases in demand for working capital from our farming customers.

This trend has continued and while there have been some increases in overdraft utilisation levels during July and August, less than 20% of approved limits are currently in use. We absolutely appreciate the extent to which our customers around the country, and particularly in the south and east, have been affected by the summer's drought and that fodder shortages and deficits remain a real challenge for livestock farmers and that yields have also suffered for our arable customers. Reduced growth and yield mean extra feeding and increased costs. We can help customers in several ways to fund this additional cost and manage their cashflow over the coming winter and spring. We understand that much of this cost has been financed initially by means of co-operative and merchant credit and we believe that for some farmers it may not make sense, or be possible, to repay all the extra costs incurred in this year in their current working capital cycle and that they may need to spread these increased costs over several years. To this end, I am glad to advise that Bank of Ireland has today launched a €100 million agriflex fodder support fund which has been specifically developed to respond to the needs of farmers affected by the challenging weather conditions over the past year. It provides farmers with extended repayment terms of up to three years compared with 12 months for a normal stocking facility, a discounted interest rate of 3.86% and will be available for applications up to 31 March 2019. This new loan finance is available to farmers seeking finance for additional fodder, for feed and for fertiliser that they have already purchased but have yet to pay for, or which they plan to purchase in the coming months. The extended repayment term of up to three years combined with a discounted interest rate will support farmers in meeting additional costs and ease difficulties around cashflow.

We are also identifying those farming customers whom we consider may be most impacted by the summer drought and in greatest need of financial support and we have introduced a dedicated outbound customer care calling programme to these customers to advise them of options available to support cashflow which include our new fodder support fund. Separately, many of our agricustomers also have loans with other financial institutions some of whom are no longer lending in this market. To deal with this we introduced an agriloan refinance package in June through which we are offering customers the option to move these loans to Bank of Ireland. We can generally match their existing interest rate and cover the bank legal fee and valuation fees associated with the move.

By moving these loans, customers can then use security transfers to help fund further development of their farm business.

Bank of Ireland participated in the Strategic Banking Corporation of Ireland, SBCI, cashflow loan support scheme in 2017 and we successfully lent €65 million to our customers in partnership with the SBCI. Farmers are not eligible to apply for the current SBCI Brexit scheme. However, as we heard earlier, should another farmer-focused scheme come onto the agenda in 2018, we will look to support and participate as we have with previous SBCI and Government lending initiatives. Our approach is that where we believe a customer has a viable farm business, we need to support him or her through short-term cashflow challenges such as those being experienced in the current year. This support may take the form of some of the initiatives that I have mentioned already. In certain cases it may entail the provision of an increased overdraft limit or indeed a stocking loan. We can also offer customers interest-only repayment options to reduce their annual debt funding requirements.

Bank of Ireland is taking a pro-active approach to supporting customers, with all of our front-line staff acutely aware of the challenges they are facing. We are actively asking customers to let us know if they believe they are likely to need extra working capital or other support. We will look to put the required facilities in place for them.

Despite the weather difficulties faced by farmers this year, we retain a generally positive outlook on this sector. Commodity prices for most sectors have held their own or increased this year, and Irish agriculture retains competitive advantage in many ways, not least of which is a low average debt level across the overall sector. Through our nationwide teams, we are committed to supporting customers and will continue to do so in the coming weeks and months as we work with all sector stakeholders.

I thank the Chairman and the committee members for the opportunity to address the committee. We will gladly answer any questions that the committee members may have.