In differing ways, this week should have marked important milestones for the three domestic Irish banks – AIB, Bank of Ireland and Permanent TSB. Instead, for reasons largely outside their own control, it will probably raise more questions than the banks probably want to answer right now.

For AIB, the publication of its half-year results should have been the final step on its journey towards a stock market flotation of its shares by the State. Another validation of its post-crash recovery.

Instead, the collapse of bank shares on global markets this year and the uncertainty generated by Brexit have resulted in its IPO plans being shelved for 2016, with some commentators quietly predicting that it won’t happen in 2017 either.

We'll have to wait and see on the latter point, but the delay in the IPO timescale must be deflating for AIB chief executive Bernard Byrne and his team given the slog involved in getting the bank to this point.

Over at Bank of Ireland, market volatility has shaved more than 40 per cent off its share price this year. The focus of its results session should have been around the continuing pick-up in business, with Richie Boucher possibly providing details on its plans to pay a dividend for the first time since the crash.

Instead, the Brexit vote has cast a shadow over Bank of Ireland’s business in the UK, which represents about 40 per cent of it balance sheet and 25 per cent of its profits.

Lower profits

Stockbroker Goodbody expects both AIB and Bank of Ireland to report lower net profits for the first half of this year (AIB down 25 per cent to €632 million and Bank of Ireland down 48 per cent to €334 million) due to lower income and reduced levels of write-backs.

Both of them have also seen the deficits in their pension schemes widen. In a trading update earlier this month, Bank of Ireland blamed the impact of Brexit on bond yields for a widening in the deficit in its defined benefit pension scheme to €1.2 billion at the end of June from €740 million at the end of last year.

Permanent TSB is first out of the traps today with its results. The good news is that it is expected to show a profit at group level for the first time since 2007 (Goodbody is forecasting a surplus of €41 million).

The bank had been expected to have completely deleveraged its non-core CHL mortgage book in the UK by the end of June, as per its restructuring agreement with the European Commission.

Instead, the Brexit vote has forced it to shelve plans to sell the remainder of this loss-making loan book.

A new deadline is under negotiation with the commission and the likelihood is that the sale of the CHL book will take some time to complete.

Collapsed share price

Then there is the PTSB share price, which has collapsed by about 54 per cent so far this year.

The bank triumphantly returned to the stock market in April of last year, with an IPO of 25 per cent of its shares at €4.50 apiece. This netted the State a cheque for €508 million, but it has been downhill for the share price ever since, which doesn’t bode well for the State’s chances of selling its remaining 75 per cent stake in the near term.

The Central Bank’s review of tracker mortgages also hangs over the sector. PTSB is probably further down the track than the other two, following the launch of its mortgage redress programme in the middle of last year, which had cost it about €40 million up to May this year.

AIB has set aside a big lump of money to cover the fallout from the review while Bank of Ireland has remained tightlipped about its exposure.

AIB and Bank of Ireland also await the results of the European Banking Authority’s latest stress tests, which will be announced on Friday night after markets have closed.

Absent momentum

This should have been a big year for the Irish banks. They are operating in Europe’s fastest-growing economy – even stripping out the effect of multinationals on the CSO’s GDP data. So new business should be gaining momentum.

The Government has announced an ambitious programme for home building that should finally stimulate supply to meet the burgeoning demand for housing among our growing population. This will stimulate new mortgage lending, albeit that it will take time to come to fruition.

And there appeared to be a strong appetite among investors for an IPO of AIB shares, who viewed it as a good proxy for the Irish economy.

Instead, the sector has been dogged by market volatility, the uncertainty created by Brexit, and issues around a review of mortgage lending rules and tracker mortgages. All of this against a backdrop of increasing regulation, rising capital requirements, and a low interest rate environment.

To borrow a phrase from soccer pundit Eamon Dunphy, this year is likely to be a good year for Irish banks, not a great year.

Twitter: @CiaranHancock1