Bank of Ireland said Britain's decision to leave the European Union has increased its pension deficit.

In a brief statement, the bank said the impact of the Brexit vote on foreign exchange rates and interest rates had pushed the deficit for its defined benefit pension scheme from €740 million in December last year to €1.2 billion at the end of June.

The bank said low interest rates had increased the liabilities in the scheme . Defined benefit schemes provide a guaranteed income in retirement as a percentage of salary . The cost to pension funds of buying this income for retirees has increased , because of rock bottom interest rates . Under accounting rules companies are obliged to account for this increased cost in the reported deficit in their pension funds .

Bank of Ireland also referred in its statement to foreign exchange rate movement. This may refer to losses on investments in sterling , which fell sharply after Brexit .

The banks said it continued to trade in line with expectations in the first six months of the year, and its asset quality continued to improve. It is due to announce its results on July 29th.

In a comment on the Bank of Ireland statement , Davy stockbrokers said it raised questions about whether the bank would be able to resume dividend payments to shareholders in tandem with its full 2016 results, as had been anticipated.

The increased pension deficit will lower its key CET1 capital ratio, the brokers pointed out , taking it from 11.2 per cent at the end of the first quarter to below 11 per cent now . The brokers had previously estimated that the bank might be able to pay 25 per cent of 2016 earnings to shareholders via a dividend but said that the pension issue “challenges our assumed dividend resumption schedule.”