Bank of Ireland sees rise in deposits

Bank of Ireland's profit margins will continue to suffer from weak loan demand and high funding costs but a marginal rise in deposits has helped ease its reliance on emergency central bank funding, it said.

Ireland's largest lender said its loan to deposit ratio had improved by around 10 percentage points since the end of the year due to a marginal uptick in customer deposits.

The group said it would update the market in coming weeks about its capital-raising plans after the central bank said in March it needed to raise 5.2 billion euros (£4.5bn) in extra capital to bulletproof itself from future economic shocks.

The government already holds a 36 per cent stake in Bank of Ireland and the bank is trying to dodge majority state control as it scrambles to raise funds from private investors

Bank of Ireland said, although the domestic economy had begun to stabilise, its operating income faced "material adverse impacts" from a range of factors including fierce competition for deposits and higher funding costs.