HomeBussinessAIB sees total income rise 18pc in higher interest rate environment

AIB sees total income rise 18pc in higher interest rate environment

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AIB attributed this growth to the higher interest rate environment.

Net interest income, the key driver of bank profitability, jumped by 27pc in the first three months of the year.

This was driven by higher interest rates, a rise in average loan volumes and a slower than anticipated pace of deposit migration.

The bank’s full year guidance includes net interest income of around €3.65bn assuming that the ECB deposit rate will be 2.75pc at the end of the year.

Net interest income was €3.8bn last year on back of rate hikes.

Net interest margin, the difference between the interest a bank charges borrowers and how much it pays savers, stood at 3.25pc in September.

Other income dropped by 14pc in the period following lower income from forward contracts as majority of loans transferred from Ulster Bank have been onboarded. Fee and commission income increased by 8pc in the three-month period.

Costs have also risen 7pc at the bank due to an growth in staff numbers, increases in wage and general inflation and the introduction of variable pay and health insurance.

AIB said it expects costs across the year to be 6pc – 7pc higher this year than in 2023.

Gross loans were €68bn in the period, up €1bn from the end of 2023. Total new lending stood at €2.8bn, which was in line with the first quarter of 2023.

New mortgage lending was up €800m. AIB now holds a mortgage market share of 35.4pc.

The Irish State’s shareholding in the bank currently stands at 37.99pc, the bank reported today. AIB is on track to finish the previously announced €1bn direct buyback following an extraordinary general meeting (EGM) today.

Following this, the shareholding should fall further to 32.9pc.

Earlier this year, AIB and Finance Minister Michael McGrath agreed to an off-market deal that will see AIB buy €1bn of shares from the State as the government looks to continue to reducing its stake in the bank.

“AIB continues to be in a position of strength with a robust balance sheet, stable deposit base and growing loan book enabling us to support our customers and the wider economy,” AIB chief executive Colin Hunt said.

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