DUBLIN, July 31 Reuters Bank of Ireland lifted its fullyear guidance on Monday and said it expects to increase returns to shareholders after rising interest rates, a growing Irish economy and a shrinking banking sector helped it more than double first half profit.

The bank reported a 1.2 billion euro 1.1 billion firsthalf underlying profit before tax versus 435 million euros a year ago when it was still operating in a negative interest rate environment. The European Central Bank has since lifted borrowing costs by a combined 425 basis points.

Ireland39;s largest lender by assets said its full year return on tangible equity ROTE would be similar to the 18.5 posted in the first half, well above the 15 target it set in March to build returns to in the period between 2023 and 2025.

As a result, it currently expects annual ordinary dividends to rise to 33 of statutory profit, compared with 25 last year, and Chief Executive Myles O39;Grady said the performance supported plans for another share buyback.

Bank of Ireland shares were up 1.5 in early trade.

The guidance upgrade centred around the bank39;s expectation that net interest income in the second half will be marginally up on the first, when it jumped by 68 yearonyear.

It also maintained guidance for a 6 full year rise in operating expenses.

Main rival AIB raised its guidance for the second time in three months on Friday, as Ireland39;s two dominant lenders benefited not only from higher rates but the recent exits of…