Bank of Ireland joined the UK’s biggest lenders in setting aside a lump sump for potential motor finance payouts as it posted its annual results.
The bank recorded a pre-tax profit of €1.86bn (£1.5bn) for 2024, which was four per cent down on the €1.94bn (£1.6bn) reported in 2023.
The bank set aside €172m (£143m) for possible compensation regarding the motor finance scandal.
Its net interest income also dropped three per cent to €3.57bn (£2.96bn). However, the fall was in line with company forecasts.
The bank holds a two per cent share of the UK motor finance market and has set aside potential compensation funds, following Lloyds, Santander, and Close Brothers.
Lloyds has put aside over £1.1bn. Santander set aside £295m, and Close Brothers set aside £165m.
Claims could be up to £30bn
The lenders suffered a blow last week after the Supreme Court rejected Chancellor Rachel Reeves’ attempt to intervene in the landmark case.
In January, the Treasury expressed worries that the scandal’s impact could trigger companies’ withdrawal from the sector and prevent customers from accessing credit to buy cars.
The scale of consumer claims to be compensated raised alarms after ratings agency Moody’s suggested the figure could be north of £30bn.
In its annual report, Bank of Ireland commented: “We expect further clarity on this matter during 2025.”
In a similar move to the UK’s Big Four banks, Bank of Ireland said it would return €1.2bn (£1bn) to shareholders through a proposed share buyback scheme.
It added further buybacks were expected over the coming years, as it looks towards a dividend payout between 40 and 60 per cent.
Chief executive Myles O’Grady said: “The group enters 2025 with momentum across all business lines.
“Notwithstanding potential impacts to global trade, our business model continues to be highly capital generative for the coming year and beyond, supporting customer growth, business model investment and attractive shareholder returns.”