• Ireland retains position as second wealthiest nation

• Wealth per head increased to €196,000 in 2006 (€168,000 in ’05)

• Ireland now has 33,000 millionaires (excluding principal private residence) – an increase of 10%

• Investor preferences shifting to international norms

Bank of Ireland Private Banking today published its annual  Wealth of the Nation Report which shows that Ireland’s net wealth grew by 19% to €805 billion in 2006 – one of the fastest growth rates in a survey of the eight leading OECD nations. Ireland retains its second wealthiest nation position, behind Japan and ahead of the UK, US, Italy, France, Germany and Canada. The average wealth per head now stands at €196,000 compared to €168,000 in 2005.

The report, which examines the nation’s wealth as measured by assets such as property, deposits and investment & pension funds, finds that the Irish household balance sheet is still in very good health with the asset base dwarfing household liabilities.  Assets currently outweigh liabilities by a multiple of six, with gross assets of €964 billion vs. household liabilities of €161 billion.  Net assets (or wealth) stood at €804 billion in 2006 and this value is forecast to increase to €928 billion in 2010 and €1.2 trillion in 2015.  The report points that residential property was the key driver of wealth creation last year.

Commenting, the Report’s author, Pat O’Sullivan, Senior Economist with Bank of Ireland Private Banking said: “Last year was a stellar one for wealth creation in Ireland with net wealth growing by 19%.  Strong economic growth combined with a strong performance by domestic and international asset markets resulted in a significant increase in Irish household wealth.  Unsurprisingly, the vast bulk of this wealth was driven by the domestic residential market, although other assets also saw strong increases, ranging from property at 20% growth, investment funds at 18% and pension funds at 11%. Despite the continued high level of debt accumulation which grew by 21%, the household balance sheet remains very robust with assets outnumbering liabilities by a multiple of six.”

“Our original forecasts for the wealth of the domestic household remain on track, and we expect net assets to increase to €1.2 trillion by 2015, an increase of 80% in the coming decade”, he added.

The Report states that while property will continue to be dominant, it may no longer be the pre-eminent asset of choice – as other assets, more particularly equity markets, will come to the fore. In 2006, Irish asset allocation stood at cash 10%, bonds at 3%, equities at 16% and property at 72%. By 2015, Bank of Ireland Private Banking predicts that asset allocation will change to cash at 12%, bonds at 5%, equities at 22% and property at 61%.

The report outlines that personal disposal income in Ireland has doubled over the past ten years, and this figure is forecast to double again over the next ten years.

The annual level of personal savings stood at €10 billion at the end of 2006 and this is forecast to increase to €13.5 billion by 2010 and to €24 billion by 2015. The latter figure equates to 14% of disposable income, which contrasts sharply with the recent averages of 1% in the US and 5% in the UK. We have to look to Germany to find a similar attitude to savings, where it approaches 10%.

The report estimates that the number of millionaires in Ireland has increased from 30,000 to 33,000 in the 12 months, an increase of 10%. Bank of Ireland Private Banking’s definition of a millionaire is the sum of total assets excluding principal private residence. Of those, it estimates that there are approximately 330 individuals with a net worth in excess of €30 million, a further 3,000 with a net worth of between €5 million and €30 million, with the remaining having a net worth of between €1 million -€5 million.

Commenting at the launch of the Report in relation to the impact of increasing wealth trends on the Bank’s Private Banking business, Mark Cunningham, Managing Director, Bank of Ireland Private Banking said: “Private Banking has grown exponentially in response to wider wealth creation trends in Ireland with our sales volumes increasing by 30% year on year in 2006.  So far this year we have seen a continuation of strong investment flows and perhaps the beginnings of a much greater diversity in the areas in which Irish investors are looking to deploy wealth. In response to the increasing customer sophistication and growth in demand, we have expanded the breath of our offering, re-affirming our position as the country’s leading private bank”.