BANK OF Ireland maintained its forecast of earnings growth of around 3 to 5 per cent for the year to March 31st, 2008, in a short trading update released yesterday.

The bank is expecting lower earnings growth due to falling stock markets and weaker sterling. Earnings rose 22 per cent to 144.6 cent in the year to March 31st, 2007.

The bank reiterated the growth forecast given in its February 15th management statement, which stated that weaker equity markets and the euro's strength against sterling could knock €55 million off profits this year.

The pound has fallen 15 per cent in the last year and declined 6.6 per cent since the bank's February forecast. It dropped to a new record low yesterday, reaching at one point 79.82p against the euro.

The February statement signalled "a more moderate level of activity" across its main markets due to slower economic growth. The bank increased the amount it was setting aside to cover falls in its investments in structured investment vehicle assets affected by market dislocation.

Davy analyst Emer Lang said she had been expecting some guidance on further impact to the life business, where the bank was reporting "negative investment variance" of €40 million in February. She said the bank sticking with its forecast was "positive".

"The intervening six weeks since the management statement have been very ropey in the markets and there may be a little bit more negative variance in the life business, but there is obviously enough there to cover it," she said.

Davy expects the actual outcome to be closer to 3 per cent as European markets have fallen 2 to 3 per cent since mid-February. It said weaker sterling could pose a problem for profits for the bank's fiscal year to March 2009.

The bank's shares fell 0.84 per cent, or 8 cent, to close at €9.42.