Bank of Ireland slumps into €1.8bn annual loss

State-rescued Bank of Ireland said on Monday that it plunged into the red in 2012 after it was hit by a soaring level of bad debts. The positive impact of a 2011 debt write-off was not repeated, therefore. BoI said in a statement that losses after tax hit 1.83 billion euros ($2.38 billion) last year. That contrasted with a net profit of 40 million euros in 2011, when it was boosted by a one-off shares-for-debt deal with its lenders. The bank, which is 15-percent owned by the state after a large bailout, said it suffered "another challenging year" during which it continued to be plagued by bad debts, or consumer loans that have been written off. Bank of Ireland wrote off a colossal 1.7 billion euros in impairment charges last year. However, this was more than ten percent less than the 1.9 billion euros in 2011. The group added that its performance was hit also by the high costs associated with slashing jobs. BoI has shed almost 5,000 jobs over the last four years. Last year alone, 1,200 employees left under the terms of a voluntary redundancy package that cost the group 150 million euros. Chief executive Richie Boucher said the economic environments in the bank's two principal markets of Ireland and Britain "remains difficult" but pointed to the last six months of last year as a positive indication of growth. "Bank of Ireland has made good progress against our strategic objectives as we enhance our core franchises and rebuild profitability within a restructured, robust balance sheet, in what was another challenging year for the group," Boucher said in the statement. "Actions we have taken began to have a positive financial impact in the second half of 2012 giving us good momentum coming into 2013." However, he issued a cautious outlook for the lender. "While the economic environment has improved somewhat in recent months it still remains difficult and the group continues to face many challenges. "However, we are starting to see some of the benefits flowing from the focus we have had over the past four years on our strategic objectives aimed at enhancing our core franchises and rebuilding profitability within a restructured, robust balance sheet." In Monday afternoon trading on the Irish stock exchange, the bank's share price rose 3.05 percent to 0.14 euros. Before the crash in the Irish banking sector, BoI shares had peaked at more than 18 euros per share. During the so-called "Celtic Tiger" boom, a decade of steady growth, full employment and cheap credit, many Irish people bought additional properties as investments, which turned sour as values, rents and demand plunged. Ireland's economy was ravaged by a domestic banking crisis and massive debts, forcing the eurozone nation to seek an 85-billion-euro EU-IMF rescue package in November 2010. The Irish government pumped 4.8 billion euros into BoI during the crisis as Dublin attempted to stabilise its troubled banking sector.