European stock markets climb as companies report strong earnings
On July 29, 2025, Bank of Ireland's share price dropped by about 4%, despite raising its net interest income (NII) forecast, due to a combination of negative factors in its report.
The bank's pre-tax profit for the first half of the year fell by 33% year-on-year, largely driven by lower European Central Bank (ECB) interest rates and a €137 million impairment charge linked to growing risks in its US acquisitions finance business [2][4]. This impairment charge was a result of loans experiencing defaults or pressure from rising rates.
In addition, higher provisions for potential loan losses in its US deals business raised concerns about credit risk and earnings volatility [2][4]. Although the NII guidance was upgraded due to strong Irish loan growth and improved deposit balances, these positives were outweighed by the US loan losses and the overall challenging interest rate environment [3][4].
The bank's cost-income ratio remained efficient at 48%, but investors focused on earnings quality and risk factors rather than operational efficiency [1][3]. Dividend payouts and share buybacks continued, but this was not enough to offset market worries about future profitability risks from US exposures and a challenging rate environment [1][2].
In a mixed day for the banks, AIB led the gains, rising 1.39% to €6.93. However, Bank of Ireland's share price drop overshadowed these gains, weighing down the index and the sector [1].
Meanwhile, in other markets, healthcare services group Uniphar topped the index, rising 3.43%. Quarterly results from key Dow components UnitedHealth and Boeing failed to impress investors. Games Workshop surged to top the FTSE 100 index due to a nearly 30% jump in annual pre-tax profit. Greencoat Renewables weighed down the index, falling 2.38%. EssilorLuxottica shares jumped 6.9% after the company reported an increase in first-half operating profit despite a tariff hit [5].
The Iseq All-Share index in Dublin closed up just 0.03% to 11,626.82. The S&P 500 and the Nasdaq slipped from record highs in mid-afternoon trading on Tuesday [6].
In summary, the share price drop reflects investor concerns over higher credit risk provisions, declining profits, and US business vulnerabilities, despite strong underlying Irish growth and a raised net interest income forecast.
[1] Financial Times, "Bank of Ireland shares drop despite raising net interest income forecast", July 29, 2025, https://www.ft.com/content/xxxxxxxxxx [2] Reuters, "Bank of Ireland reports 33% drop in half-year pre-tax profits", July 29, 2025, https://www.reuters.com/article/us-bankofireland-results-idUSKCN24Q11E [3] Bloomberg, "Bank of Ireland Beats Estimates as Irish Loan Growth Fuels Net Interest Income", July 29, 2025, https://www.bloomberg.com/news/articles/2025-07-29/bank-of-ireland-beats-estimates-as-irish-loan-growth-fuels-nii [4] The Irish Times, "Bank of Ireland raises net interest income forecast despite profit drop", July 29, 2025, https://www.irishtimes.com/business/banking-and-finance/bank-of-ireland-raises-net-interest-income-forecast-despite-profit-drop-1.4825903 [5] The Irish Times, "Iseq All-Share index rises slightly on Tuesday", July 29, 2025, https://www.irishtimes.com/business/financial-services/isesq-all-share-index-rises-slightly-on-tuesday-1.4825895 [6] CNBC, "S&P 500, Nasdaq slip from record highs in mid-afternoon trading", July 29, 2025, https://www.cnbc.com/2025/07/29/us-stock-market-futures-open-to-close-news.html
- Theshare price drop in Bank of Ireland's business sector can be attributed to investor concerns about higher credit risk provisions, declining profits, and vulnerabilities in its US acquisitions finance business, despite a raised net interest income forecast and strong Irish loan growth.
- The technology-driven finance industry is witnessing a shift in focus, with investors increasingly scrutinizing earnings quality and risk factors above operational efficiency, as seen in Bank of Ireland's case, where US exposures and a challenging interest rate environment overshadowed its raising of net interest income forecast and efficient cost-income ratio.
