Pearse Doherty (Donegal South West, Sinn Fein)
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To ask the Minister for Finance further to the publication of results for 2012 by Bank of Ireland, in which he owns 15% of the ordinary shares, if he will provide his reaction to the performance of the bank in 2012 [13076/13]

Michael Noonan (Limerick City, Fine Gael)
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I was pleased to see that Bank of Ireland’s 2012 results were slightly ahead of investors’ expectations and indeed prompted some in the market to upgrade their forecasts of the bank’s prospects for the years ahead. In order for Bank of Ireland to return to strength, meet the needs of the Irish economy and enable the State to exit its investment, it has to develop a profitable commercial enterprise and these results show that the bank is definitely well on its way to achieving this goal. The positive takeaways would be that the profitability of the bank is improving with a net interest margin of 1.34% in H2 2012 up 0.14% from H1 2012, auguring well for this year and beyond. The removal of the ELG scheme this year and the on-going reductions in deposit rates will also help. The bank is well capitalised with its Core Tier 1 ratio of 14.4% stronger than the market expected at year end and while impairment levels are still very high, the trend here is downwards.

There are still areas of concern however. Operating costs need to come down further while the level of non-performing loans is still rising, albeit at a slower pace. Mortgage arrears at the bank look to be close to their peak, but as I’ve said many times before I am not happy at the pace at which the banks are moving to deal with this issue. Addressing mortgage arrears is a top priority for the Government and we expect to see real progress on this issue in the months ahead.

Pearse Doherty (Donegal South West, Sinn Fein)
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To ask the Minister for Finance if he will provide the latest valuation of the State’s interest in Bank of Ireland, particularly the value of its ordinary and preference shares. [13077/13]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware, as part of its recapitalisation commitments, the State invested €4.7bn in Bank of Ireland (BOI). The State has received c.€0.5bn for its warrants which were originally attached to our preference shares, and significant income in the form of coupons and dividends on its investments. In January 2013 the State also successfully disposed of the €1.0 billion Contingent Capital instruments in Bank of Ireland at a profit of €10m. The State’s remaining investment in BOI consists of a 15% equity stake and preference shares with a nominal value of €1.8bn. The most recent valuation of these holdings is contained in the NPRF 2011 Annual Report published on the 19th July 2012 and available on its website. As at the 31st December 2011, the NPRF valuation of its investments in BOI was €1,843m consisting of preference shares of €1,473m and ordinary shares of €370m.

I understand that the value of both of these investments has improved since then as evidenced by the recent strength in BOI’s share price. As of 7th March 2013, the share price was over 14c versus 8c at the end of 2011, putting a value of approx. €660m on our equity holding. A more up to date value on our preference shares will be contained in the NPRF’s 2012 Annual Report.