Bank of Ireland lifted its net interest income guidance for the second time in three months on Thursday and now expects it to be 5% higher in the second half than the first due to higher rates and ongoing business momentum.

Ireland's largest lender had previously guided that net interest income from July to December would rise marginally versus the previous six months, when it jumped by 68% year on year helped by a string of European Central Bank rate hikes.

Having raised its key interest rate to a record high of 4%, the ECB is expected to keep it unchanged at a meeting later on Thursday.

Bank of Ireland kept its guidance for costs and business income unchanged, with the latter expected to be broadly in line with the first half.

It also provisionally estimated that its share of a levy lenders must pay to the state will rise to 90 million euros ($94.8 million) next year from 25 million euros in 2023 following a recent increase announced by government.

Analysts at Davy and Goodbody Stockbrokers said a strong capital position meant the bank was well placed to hike shareholder distributions next year. Its fully loaded core tier 1 capital ratio - a key measure of financial strength - rose to 15.2%.

Bank of Ireland's main rival AIB, which is due to issue a trading update next week, also raised its guidance twice in quick succession earlier this year.

Ireland's two dominant lenders have benefited not only from higher rates from but from the recent exits of KBC and NatWest from the Irish market.

($1 = 0.9495 euros) (Reporting by Padraic Halpin; editing by Jason Neely)