AIB to repay State €1.8bn in July in a 'turning point' year
Published 25/05/2016 | 02:30
AIB has said it will have repaid €6.5bn to taxpayers by mid-July, including €1.8bn due from the Contingent Capital Notes.
At the bank's agm yesterday, chief executive Bernard Byrne said the lender was ready for its partial privatisation, which Finance Minister Michael Noonan said is now likely to occur next year.
In the first three months of this year, the bank increased its net interest margin (NIM), reduced its portfolio of bad loans and boosted lending.
AIB chairman Richard Pym said 2015 was a "milestone" year and a "decisive turning point" for the bank in its recovery.
Chief executive Bernard Byrne said the bank had made a payment to the State of €1.7bn in December following its capital reorganisation, and a further €1.8bn will be paid in July.
Around €3bn has been paid in fees, coupons, dividends and levies.
But a number of concerns were raised yesterday by shareholders, including the rate charged by the bank for standard variable rate mortgages.
AIB has now cut its rate on four occasions, but consumer advocate Brendan Burgess said further cuts are required. He noted the difference in rates charged by First Trust Bank in Northern Ireland, a subsidiary of AIB, and the latter in the Republic.
"Despite the progress that you have made in this country, you're still paying much higher deposit rates in Northern Ireland and you're charging much lower mortgage rates and you're making much better deals available to borrowers. That is absolutely outrageous," Mr Burgess said.
But Mr Byrne dismissed the argument, saying it is comparing apples and oranges, and is deliberately ignoring the differences between the two markets".
He said the Northern Irish market has fees in it. "When you take those issues into account and you look at the fact that the Irish market has reduced pricing from the second quarter of last year to now by 71 basis points, the average market in Europe has been 19 basis points.
"The Irish market has been catching up quite quickly in terms of rate reductions.
"In overall terms, the total difference between a Eurozone average mortgage book and an Irish mortgage book, is six basis points," he said.
"The key characteristic difference is front book pricing, versus overall pricing."
Mr Byrne later told reporters that the bank would not be subject to political pressure to bring rates down further.
"We can't operate the bank at the whim of an ownership construct that is politically influenced, because that would destroy our ability to raise capital," he said.
Mr Pym also dismissed recent whistleblower claims that the bank had exaggerated its success in dealing with problem loans.
He said its reporting of non-performing loans and provisions have been "comprehensively reviewed" and that they were "entirely satisfied that the accounts are accurate".
In a trading update ahead of the agm, AIB said it had increased its core tier one capital ratio to 13.1pc from 13pc under fully loaded Basel III industry rules.
New lending draw downs increased 17pc on the year, while bad loans fell €1bn from the end of December to €12bn.