Bank of Ireland ends AA partnership, trims UK Post Office offering

DUBLIN (Reuters) -Bank of Ireland said on Tuesday that it had ended its partnership with UK motoring services group The AA and would trim its product range provided via the UK Post Office, marking a further retreat from the British market.

Ireland's largest bank has reduced its lending assets in the UK by about a quarter since 2017, while at the same time trebling its underlying profit there by of focusing on "value over volume".

The bank said it had extended its UK Post Office partnership for a further five years to a minimum end date of 2031 but would no longer provide Post Office branded mortgages or personal loans and focus on savings products.

It will also no longer provide unsecured personal loans and savings products under the AA brand as a result of ending the partnership that it launched in 2015.

The bank said it has historically originated the vast majority of its UK unsecured personal loans through the two partnerships and had reduced this portfolio during 2023, with balances expected to be around 1.3 billion euros by year-end.

Its 50/50 foreign exchange joint venture with the UK Post Office is unaffected while UK mortgage lending will continue via the bank's own brand.

In a group strategy update earlier this year, the bank said it would continue its niche strategy for UK mortgages, expand its car finance distribution there and seek to maintain its position in Northern Ireland.

The UK business made up around a quarter of the bank's 1.2 billion euro underlying profit last year and 31% of customer loans at the end of June 2023, compared to the 60% generated in Ireland.

The bank lifted its income guidance for the second time in three months in October on the back of rising interest rates, a growing Irish economy and the departure of two key rivals from its home market.

It noted in its half-year results that the outlook was more uncertain in the UK. Analysts at Davy Strockbrokers said the move should be welcomed against the backdrop of the divergent performance and outlook of the Irish and UK economies.

(Reporting by Padraic Halpin; Editing by Kirsten Donovan and Jane Merriman)