AIB's Duffy says bank will be back in profit next year
AIB said it plans to be back in profit by the end of next year and does not expect to come back to taxpayers seeking further bailouts.
Taxpayers could expect to recoup some of the €21bn cost of rescuing the bank, once it returns to profit, according to chief executive David Duffy.
A return to profitability will make the bank "investable", Mr Duffy said in an interview with RTE radio yesterday.
Taxpayers can then start to recoup some of the bailout costs from a partial sale of AIB, and from dividends, he said.
Bad loans from the boom era remain a major issue for the lender, but the nationalised bank said it is on course to have sorted through the bulk of distressed mortgages and troubled loans to small and medium enterprises (SMEs) by the second half of 2014, said Mr Duffy.
AIB was criticised earlier this year when Mr Duffy revealed to TDs and senators on the Oireachtas Finance Committee that a huge proportion of loan restructuring offers made to struggling customers was a letter threatening legal action.
Yesterday, in the interview with RTE, he said the bank was forced to send the letters to meet banking rules.
The bank has agreed customer deals to permanently "restructure" 5,000 mortgages, Mr Duffy said.
That is around one in five of the number of AIB home loans that are 90 days or more in arrears.
The figures include 400 so-called "split mortgage" deals, where a portion of the total home loan is parked interest-free for an extended period and the borrower only has to service the rest of the loan, he said.
Demand for business loans is low, demonstrated by the fact that just 40pc of approved loans are being drawn down, Mr Duffy said.
Restructuring boom-era loans is happening, including writing off some debt, he said.
Nine out of 10 business borrowers in financial difficulty are engaged in talks with the bank, he said.
Deals have been offered to 64pc of business customers that owe €1m or more. That figure should reach 100pc by the end of next year.
In contrast, around 40pc of mortgage borrowers in arrears are not engaged with the bank, he said.
However, home loan arrears rates are "stabilising" -- helped by the fall in unemployment and the bottoming out of house price falls, Mr Duffy added.