AIB has reported profit after tax of €477m for the first six months of the year, an increase of 74% year-on-year, following a net credit impairment writeback of €309m that the lender had previously set aside to cover bad loans stemming from the pandemic.
Net lending at the bank rose 20% to €5.4bn, with green lending making up €1.3bn or 23% of the total, while its share of the Irish mortgage market has increased to 31%.
Total income was up 8% to €1.3bn, thanks in part to a 26% increase in fee-based and other income and a 2% uptick in net interest income. Similarly, costs rose 6% to €800m despite the bank reducing full-time staff numbers by 2% to 8,950.
AIB managed to reduce its stock of non-performing exposures by 22% or €700m to €2.4bn or 4.2% of its total loan book, with legacy bad loans accounting for €300m or 0.6% of its loan portfolio. The lender said it is on course to reduce its proportion of bad loans to 3% by 2023.
Performing loans rose €800m to €56.1bn, and AIB said it had migrated €200m in corporate and commercial loans from Ulster Bank by the end of June. Meanwhile, customer deposits increased 3% to €95.9bn.
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Some 205,000 new accounts were opened with AIB during the first six months of the year, an increase of 110% year-on-year and nearly triple the number opened with Permanent TSB.
The bank will also absorb 47,000 Ulster Bank customers after striking a deal for the NatWest-owned lender's €5.7bn performing tracker mortgage portfolio.
It is also continuing with plans to reduce costs by €230m, having now implemented hybrid working at three Dublin head offices and exited its SME lending business in Britain. The bank last week rowed back on plans to cut cash services at 70 branches nationwide.
Colin Hunt, CEO of AIB, said the results were "solid" and demonstrated the group's "ongoing stability and strength".
"Having significantly de-risked the balance sheet with legacy NPEs now reduced to only 0.6% of gross loans, we are in as robust financial shape as possible to support our 2.8m customers and the wider economy as we collectively navigate the next period of uncertainty," he continued.
"Given the changing banking landscape and evolving operating environment, our medium-term targets are under review and we will update the market in due course.
"We see upside potential to our [return on tangible equity] target, with the significant momentum we are seeing in income offset to some extent by cost inflation.”
Net interest income at the bank rose year-on-year from €881m to €895, with lower cost of liabilities and higher income from investment securities. The 26% increase in other income to €379m was in part down to €33m from Goodbody.
Looking ahead to the rest of the year, AIB said economic conditions and volatility are rapidly changing with upward pressure on inflation and interest rates, but added that its strong balance sheet position would allow it "support customers".
Fore the full year, AIB forecast that net interest income would increase by 10%, other income will total €700m, exceptional costs of €300m, total costs of €1.6bn, and customer growth of 5-6%.
Photo: (l-r) Colin Hunt and CFO Donal Galvin.
