You can watch Ritchie Boucher at the Finance Committee now

Mortgage pricing
75% of new mortgages in RoI are fixed rates
Our lending has increased between first 9 months of 2015 and first 9 months of 2016
 
Boucher
We have had the highest take up of mortgage to rent
But it's still very difficult to get through the administration
 
Pearse Doherty

Pattern of approvals outstripping drawdowns by 2:1 (Is this not due to people getting multiple approvals but only one drawdown?)

Boucher: There could be 10 bidders for a property
Shortage of supply is the main problem - but it is improving
We believe that 50% of properties are being bought without mortgages
Deposits being used to buy properties

Doherty
We have heard that people can't get mortgages

Boucher
From the developer's perspective: It's not an easy way to make money . Return on capital is 10% is everything goes well.
Central Bank Guidelines made developers nervous

Doherty
Are you concerned about the high prices of commercial property - especially in Dublin

Boucher:
Risk for economy is reduced because most are bought with overseas funds for cash.
As a bank, we have learned lessons,so we dont' finance speculative office development and not more than 60%
Rents are increasing
 
Doherty
Help to Buy Scheme - You were consulted on this. What did you say?

Boucher
We weren't consulted except in a very general sense as part of a wide range of issues.

Doherty
Thresholds from Central Bank
177k is your average FTB mortgage
How many would benefit from an increase from 220 to 300.

Boucher
Average LtV is 70%
It's a Dublin issue because of
Some Dublin buyers are constrained.
We have sufficient demand to go above the 15% exception.

Doherty
30% to FTBs and 70% to STB
Why don't you give a bigger share to FTBs.
How do you determine who gets it?

Boucher /McLoughlin
We don't use the broker chanell
90% of our customers are existing bank customers
We don't have the supply for the FTBs mortgages

Doherty
A lot of increases in morrtgage approvals since March this year? Why?

McLoughlin
Good recovery in employment.
A very significant rental market
€5.5 billion this year + a lot of cash buyers
We expect at €10billion market in a few years.
 
Mortgage arrears

Boucher
We give 90% of our customers a deal and 90% of restructures stick.
The level of repossessions is likely to increase. It's inevitable. It will happen over a few years.
 
Senator Paddy Burke FG (There doesn't appear to be any FG TD present. )

How do you compare with other banks?
You have a perception of being much tougher than all the other lenders including the vulture funds.

Boucher
We must put in a sustainable solution.
As the CEO of a public company, 90% of challenged customers who send us an SFS get a restructuring. And 90% stick.
The number of proposed PIAs we don't support is below the industry average

Burke
What are your fixed rates?

McLoughlin
It's in the presentation -
And they get 2% cash back as well.

Burke
Slide 38 - borrowers 1358 over 2 years in arrears. The majority will require social housing.
Could you not do a write-down


Boucher /McLoughlin
It's 1.8% of our mortgages compared to 5.5% for the industry
726 are paying nothing at all
267 are paying less than 50%
Their average contractual mortgage payment is €926 vs €1,060 for rent
If they get social housing, they have to pay something. They are paying us nothing.

Burke
You are buying some portfolios of mortgages from Start, IBRC and Danske

Boucher
We only buy the performing portfolios
Private equity buys the non-performing portfolios
The customers are now with a bank which is active so they have a long term sustainable home.
They are valuable customers.
We want more customers.

Burke
Strange questions about deals. He wasn't listening to the earlier answers.
 
Senator Rose Conway-Walsh (Sinn Féin)

Can you rule out selling mortgages to a vulture fund

Boucher:
That is not our policy, but I can't say never,never,never.

Conway
Are your trackers loss making? .

Boucher
Not for us. We are not covering our cost of capital.
They are not on a cash loss basis.

450 is our gross margin.
Our cost of admin is 50%

Conway
So the the other half have to pay for the lack of profits

Boucher: replied that SVRs should fix rates

Conway: When will QE stop and what will be the effects

Boucher
No one knows.
It might happen more quickly than people think.
 
McLoughlin:

4% of transactions now take place over the counter.

Over 80% of elderly customers are comfortable with ATMs for lodgements.

Conway: Of course only 4% are over the counter as you are turning customers away.


Chairman: My branch is now completely cash. No staff.

Boucher: We have a choice : to close the branch.

McLoughlin: Our customers have decided that they want to go digital. They are stopping using paper e.g. cheques. Both young and old people.

More than half of transactions are now on mobiles.
 
Paul Murphy

BoI business online looks like something from the 90s.

Regling and Watson, and Honohan criticised the exposure to property. But you are just as high now?

Boucher
58% are mortgages - but they are loans to people , backed up by property. It is primarily based on the repayment capacity.

Murphy
Are you worried about a crash in the UK

Boucher
We are separately capitalised. If a meteorite hit the UK tomorrow, our investment would be wiped out, but we would survive as we are separately capitalised.
 
They have now moved onto why are the elderly not being given people to chat with in the branches.

Senator Kieran O'Donnell: 60 elderly people had a dignified protest outside the cashless Caherdavin branch in Limerick. Why did you pick Caherdavin? Why wouldn't you have a teller for one morning a week.

Boucher: We are changing the role of the branch. We don't want to close branches. They have to evolve or close.

We have 27 staff in Caherdavin. We have to make it council. The quantum of paper transactions is down. We have to redeploy those people but within the community.

(Can they not switch their account to AIB?)
 
I took a break for a while and I come back to Sean Sherlock giving out about the move to cashless branches.

I sent them a briefing on
Mortgage Rates
The Central Bank restrictions
The Tracker Redress bank.

( I wonder did any of them ask about these while I was out?)

Now, he is on to rugby sponsorship...

Brendan
 
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