Monday 26 August 2019

AIB reports €436m pre-tax profit for first half of 2019

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Donal O'Donovan

Donal O'Donovan

AIB has reported a profit of €567 million in the first half of the year, before tax and exceptional items.

Including exceptional items pretax profit was €436m.

The exceptional costs of €131m predominantly relate to the costs of the tracker mortgage scandal.

AIB, along with other lessons is expected to be fined by the Central Bank of Ireland for its role in the consumer protection scandal.

The bank said it was a solid first half to the year with sustainable profitability underpinned by stable net interest income and solid margins.

The net interest margin (NIM) for 2019 was 2.46pc, down versus the first half in 2018. NIM is the difference between a bank's interest costs and interest income and a standard measure of financial health in the sector. The fall reflects a widening gap between loans and deposits offset by a combination of factors such as the rising cost to the bank of holding cash.

"We continue to monitor and manage the impact of excess liquidity and remain comfortable with our medium-term NIM target of 2.40pc plus," AIB said.

Operating expenses of €744m were 6pc higher than the prior year, lifted by rising wages, increased depreciation, the elevated cost of the bank's distressed loan work- out unit and regulatory costs.

Non-performing loans (NPLs) reduced by €1.4bn in the first half of the year, but almost all in the first three months.

Analysts at Davy said NIM was in line with expectations but higher costs and higher risk weighted assets left core capital behind its forecast at 17.3pc.

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