Bank of Ireland Annual General Court; Opening Statement by the Governor Mr. Howard E. Kilroy.

Business Editors

DUBLIN--(BUSINESS WIRE)--July 5, 2000

Bank of Ireland Group (NYSE: IRE), a leading Irish financial services group, today announced the following opening statement by the Governor, Mr. Howard E. Kilroy, at the Annual General Court:

"Welcome to the first Annual General Court of the new millennium and my last meeting as Governor. It has been a pleasure and an honor to address the Stockholders of the Bank at nine of these meetings and during a period when the business has achieved strong growth in earnings and returns to its owners. Despite recent weaknesses in the valuations of financial stocks, Bank of Ireland still retains its position in the top quartile of European banks over five and ten years in terms of return on the equity employed in the business and returns to shareholders. The Directors and management are confident that the Group will continue to deliver ROE in excess of 20% in the medium term and we can be very positive on the outlook for the current year based on the trends already evident.

"Continued strong growth is expected in Ireland; the Bank's domestic franchise is a testament to the strength of our brand and the quality of our customer offerings. It is particularly significant, I believe, that the pace of growth has not been affected by the arrival of a variety of high profile competitors in the Irish market. Bank of Ireland is recruiting new customers for mortgages, for credit cards, for consumer loans and for its savings products because of the strength of its brand, the quality of its service and, most importantly, the real value that it offers. We are proving to be very tough competitors for the newcomers and they will have to fight hard to achieve any material foothold in the Irish market.

"It is worth remembering that there were similar incursions into this market in the past. During the 70s and 80s, U.S., European and Australian banks set their sights on Ireland and had ambitious plans to erode our market share. They did not succeed and, at best, have achieved only niche status here. In the meantime, Bank of Ireland has continued to grow; we have been key partners in the achievement of Ireland's economic resurgence, and we are benefiting from the strong economy we have helped to create.

"This is not to suggest that we are remotely complacent about current market developments in Ireland. Indeed, new competition is good for the Bank; it makes us more innovative, more competitive and more customer focused. Competition forces down costs and results in better value for consumers. It speeds progress towards newer, more efficient and more cost effective delivery channels and Bank of Ireland will lead in the provision of such services.

"In the UK, we are building Bristol & West into a significant player in selected, profitable market segments, including specialist mortgage products and personal savings and investments, which we intend to expand into independent advisory activities. The UK operations continue to perform well in a very competitive market. Further international growth will be achieved through Bank of Ireland Asset Management, the Group's IFSC operations, and joint ventures, such as the recently concluded agreement with NOVA Corporation.

"Our continued progress in Ireland and abroad will be facilitated by our determination to maximize the cost efficiency and service benefits of new delivery channels. We plan to be the most innovative bank in our home market and, using e-commerce, to exploit profitable niche markets outside Ireland. We are evolving very rapidly into an e-business bank which can offer world class technology to its customers in every key product area. Ours was the first Irish internet retail banking service, the first secure payment product, the first full service internet bank for expatriates and, without doubt, the best internet banking facility for Irish business. These core services will be augmented by a range of important new initiatives and innovations in coming months.

"Our growth ambitions are coupled with a vigorous commitment to deliver cost efficiency across the Group. Our target cost/income ratio of 50% is on track for delivery by 2002/2003.

"In the Report and Accounts, I referred to the report of the Comptroller and Auditor General and the subsequent Public Accounts Committee hearings which drew attention to the failure of financial institutions to comply with the provisions of the Finance Act, 1986, relating to Deposit Interest Retention Tax (DIRT). I also said that the Group was anxious to bring this matter to an early conclusion and was co-operating fully with Revenue to achieve that end.

"I am now able to inform you that Bank of Ireland has agreed with Revenue, following their very detailed audit covering all relevant parts of the Group for the period 1986 to 1999, to make a full and final settlement involving the payment of additional DIRT of (pound)12.75 million in respect of that period. The Group's total DIRT remittances from 1986 to 1999 amount to some (pound)630 million. Interest and penalties applied by Revenue amount to (pound)17.75 million. This was a regrettable episode in an otherwise compliant organization and we are determined that such circumstances will not arise again. The settlement, which in total amounts to (pound)30.5 million, brings this matter to a close and payment has been made.

"Looking to the future, the Group's growth strategies are fully supported by the Court and by management. We will continue to grow our business, both domestically and in our chosen overseas markets. We will continue to focus on the delivery of stockholder value. And we will continue to deliver returns on equity in the top quartile for peer banks. We will have the fleetness of foot to adapt quickly to market changes and we have demonstrated very clearly in recent years that we are capable of surmounting market challenges and of driving our various businesses forward in the face of both established and new competitors.

"Despite current inflationary trends in the Irish economy, we are confident in the durability of Irish economic success. The dynamic economy which we have enjoyed for some years is a product of fundamental economic and demographic factors and any comparisons with boom and bust economies are simply not valid. The prudent credit management policies traditionally pursued by the Bank and the resulting excellent credit quality which we enjoy provide a foundation upon which we can maximize the benefit of continuing economic growth.

"As I mentioned earlier, this is my last AGC as Governor of Bank of Ireland and I want to take this opportunity to thank all of my colleagues on the Court for their support during my tenure, for their professionalism and for their dedicated service to the Bank. I also wish to acknowledge the support of the exceptional managers with whom I have worked for the past nine years. In Pat Molloy and Maurice Keane, I have served with Chief Executives of the highest caliber, supported by dedicated and highly skilled management teams. The relationship between the Executive and the non-Executive members of the Court was always excellent and, most importantly, conducive to the achievement of our agreed goals for the business. I also had the pleasure and the privilege to meet many staff throughout the organization and I was unfailingly impressed by their loyalty to the Bank, their enthusiasm in the face of new business challenges and their determination to see the Bank succeed.

"Finally, I want to thank you, the Stockholders, for your courtesy to me at these meetings and for your continuing support of the Bank through your ownership of Bank stock. At each AGC, I have stressed my own and the Court's emphasis on the importance of Stockholder value as a guiding principle for the Bank and I hope you agree that the returns you have received reflect this philosophy. I am delighted to welcome Laurence Crowley to the Governor's chair. His very high standing in the worlds of business and academia are an excellent background to the task that he now takes on. I am confident that the Bank, under his direction, will continue to grow and to meet your highest expectations for return on your investment.

"A copy of my statement and some supplementary information on current trading performance has been released to the Stock Exchange this morning and copies are available at the Information Desk."

In addition to its US listing (NYSE: IRE), Bank of Ireland ordinary shares trade on the Irish Stock Exchange and the London Stock Exchange and prices may be accessed on Bloomberg under the symbol BKIR ID, on the Reuters Equities 2000 Service under BKIR.I, and on Quotron under the symbol BKIRU.EU. Additional information is available on Bank of Ireland's home page: http://www.bankofireland.ie