Friday 23 June 2017

AIB awaits call on sale of State's 25pc stake as profits rise to €1.9bn

AIB chief executive Bernard Byrne at the announcement of the bank’s results. Photo: Shane O’Neill Photography
AIB chief executive Bernard Byrne at the announcement of the bank’s results. Photo: Shane O’Neill Photography
Colm Kelpie

Colm Kelpie

A delay in floating AIB on the public markets to 2017 wouldn't be an issue, its chief executive Bernard Byrne has said.

However, he added that it would be preferable to go before the end of this year as planned.

As the bank announced it had almost doubled its pre-tax profits in 2015, Mr Byrne said AIB was ready to begin its return to private ownership this year, but the market currently is volatile.

Mr Byrne said Finance Minister Michael Noonan had floated the prospect of a sale of part of the lender in the third quarter of this year, but the top banker said the date of the IPO was not critical.

"From our perspective, that's not as important as the issue of moving in the direction of getting the business in shape," he said.

"If that slips - by three months or six months - that isn't the big issue.

"The big issue is making sure that the business is ready. Obviously we would like Q3 as it takes away uncertainty and allows you to progress towards it, but it is not the big thing."

If markets remain as volatile during the rest of 2016 as in the year so far, any new government faces the choice of delaying a sale or accepting less for the bank.

The bank's chief financial officer, Mark Bourke, told Reuters that a delay in forming a new government could also slow the process down.

AIB made a pre-tax profit of €1.9bn last year - up 72pc on the previous year on the back of new lending, continued progress on operating expenses and net credit provision write-backs of €925m.

Mr Byrne said the bank was well positioned to recover its €20.8bn investment.

The bank said €14.4bn in new lending to customers was approved in 2015, with €8.7bn of drawdowns, up 49pc on 2014.

There has also been a substantial reduction in impaired loans to €13.1bn, down €9.1bn since December 2014 and €15.8bn since December 2013

AIB chairman Richard Pym said the results reflect the scale of AIB's financial transformation to sustainable profitability over the past number of years.

"Our strengthened capital position and ongoing improving risk profile reinforces our progress and paves the way for the State to potentially sell part of its shareholding in AIB," he said.

Meanwhile, Mr Byrne also said that while it was contingency planning for the prospect of a British vote to withdraw from the EU, a Brexit would not have a major impact on AIB's business.

He said AIB's UK operation is a small share of its overall business.

"The impact of a Brexit from that point of view would be more modest in our business than it might be for others," he said.

"In the short term we don't think it presents any particular issues ... We have been contingency planning for it."

In a note to clients, Investec Ireland said the bank's continued improvement in profitability and strong capital position positioned it well for an IPO.

Irish Independent

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