Bad loans fall as AIB sees rise in capital
State-owned AIB has said it generated more capital, reduced its bad loans and increased its net margin in the third quarter.
In an interim management statement released yesterday, the bailed-out bank said it is working with the Department of Finance to finalise the terms of its capital reorganisation, under which it is to start repaying the €21bn it received in the form of a bailout from the taxpayer.
It also said it expects the Central Bank's mortgage lending rule would impact on future mortgage lending.
Analysts said the underlying momentum remains strong. Ryan McGrath of Cantor Fitzgerald Ireland said that across almost all metrics, the bank continues to improve or maintain the positive trends reported in the bank's earlier results.
"A strong contribution from the underlying businesses are contributing to a sustainable performance by the bank," Mr McGrath said. "At an industry level, the demand versus supply dynamics and the Central Bank of Ireland macro-prudential measures are expected to impact future growth rates in the mortgage market."
The bank said its impaired loans reduced by €2bn in the quarter, thanks in part to continued restructuring and the improved economic environment.
Irish mortgage arrears fell 19pc in the nine months to September with lower levels of new arrears and increasing numbers of customers exiting arrears.
The total number of accounts in arrears in the owner occupier and Buy-to-Let portfolios fell 20pc and 18pc respectively since December of last year.
Net loans remained stable at around €64bn by September, versus June, but performing loans, including positive foreign exchange impacts, increased to around €56bn from around €53.6bn at the end of December.
AIB chief executive Bernard Byrne said the bank's performance is continuing to improve.
"Our customer-focused strategy is enabling us to grow our lending, support the economy and further reduce non-performing loans," he said.
"Encouragingly, total lending drawdowns continue to increase, with €6.2bn for the year to date and additionally impaired loans have further reduced by €2bn in the quarter.
"The key indicators show that AIB is set to continue playing a central role in the rapidly-growing Irish economy.
"The recent approval by the ECB of our reorganised capital structure is welcome and positions us well to repay capital to the State."
Davy stockbrokers said the underlying momentum remains strong, evidenced by progression on net interest margin, increased lending and impaired loans reduction.
"While strong capital will pique the attention of credit investors in the near term, the underlying momentum and ongoing write-backs will attract an equity audience ahead of AIB's market return in 2016," said Davy's Stephen Lyons.
Goodbody Stockbrokers said the bank's balance sheet was stabilising.