Today's report gives “positive indications of an income recovery to complement balance sheet healing we've been witnessing for some time,” Stephen Lyons, an analyst with Dublin-based securities firm Davy, said by e-mail.

The pace of growth of home-loan arrears continued to ease since June, Bank of Ireland said. The nation's banks are struggling with residential mortgages after the state-owned National Asset Management Agency took over most of its risky commercial real-estate assets in 2010.

“We maintain our expectation that impairment charges will reduce from the elevated levels experienced in 2011, trending over time toward a more normalized impairment charge as the domestic economy recovers,” Bank of Ireland said. The lender reported a 1.94 billion-euro impairment loss last year.

The bank had a 13.9 percent core Tier 1 capital ratio, a gauge of financial strength, at the end of October. It is “actively considering actions” to address its pension deficit, which increased by 600 million euros since June to 1.6 billion euros. The spokeswoman declined to comment on what measures the bank is weighing.

Eoin Treacy's view Bank of Ireland is the only Irish bank to have avoided outright government ownership and remains the most likely candidate to be the first Irish bank to exit the bailout program. The fragile state of the Irish property market and continued low growth remain headwinds, although potentially a less troubling influence than initially anticipated. Nevertheless, Bank of Ireland's base formation development is likely to be lengthy (Also see Comment of the Day on January 12th 2012).

The share has been ranging between 8¢ and 11¢ since June and is currently mid-range . A sustained move above 11¢ will be required to confirm a return to demand dominance beyond the short term and the share would be best bought on weakness.

The Bank of Ireland 10.1% perpetual preferred share cut its dividend in 2010 and missed one payment before re-establishing it in 2011. It is now paying 63¢ on a semi annual basis and has a net yield of 13%. The price has been locked at 7.5p since February amid a very illiquid environment but represents perhaps the best way to participate since the prospect of extensive base formation development is the most likely scenario.

The ISEQ Index, which had previously been dominated by banks, is now more heavily weighted by CRH (building materials), Ryanair (airlines) and Kerry Group (food ingredients).

The USA is CRH's largest market and it is a potential beneficiary of a pick-up in housing starts there. The share has held its dividend steady since 2010 and currently yields 4.36%. It has been largely rangebound since 2008 and a sustained move above €17 will be required to confirm a return to medium-term demand dominance.

Ryanair rallied impressively last week and has become somewhat overextended relative to the 200-day MA. However, a sustained move below the trend mean, currently near €4.25, would be required to question medium-term scope for additional upside.

Kerry Group is the sole Irish S&P Europe 350 dividend aristocrat and yields 0.86%. It posted a downside weekly key reversal and followed through last week to post a peak of at least near-term significance. However a sustained move below the 200-day MA, currently near €37, would be required to question medium-term uptrend consistency.