Business Irish

Friday 15 November 2019

AIB signals job cuts amid 'challenging' European conditions

Ellie Donnelly

Ellie Donnelly

AIB said it expects to finish the year with less than 9,500 employees amid “challenging” conditions for the sector.

The bank currently has around 10,000 staff, and last month it looked for 200 employees to apply for voluntary severance.

In a trading update it said the operating environment for European banks has become more “challenging”.

AIB’s net interest margin (NIM) – a key profitability indicator for banks – was 2.42pc, down on the first half of the year.

NIM is the difference between a bank's interest costs and interest income. The fall was due to lower income from investment securities and the cost of holding cash.

AIB said the negative interest rate environment is “very challenging” for the sector and manifested in a negative 11basis points impact on its third quarter NIM of 2.32pc, due to average Euro excess liquidity of around €4bn in the quarter.

“We continue to take management action in relation to negative deposit pricing,” AIB said.

Elsewhere,  mortgage lending increased 9pc in the nine months to 30 September at AIB.

The bank has a mortgage drawdowns share of 32pc.

The bank said personal lending is delivering a “strong” performance, while sentiment among small and medium business remains “cautious” on the back of Brexit uncertainty.

“Notwithstanding this we have seen an uptick in new lending year to date,” AIB said.

Commenting on the update, analysts at Davy Stockbrokers said they expect to reduce their 2019 profit before tax forecast for the bank by a low- to-mid-single-digit percentage.

Last week AIB announced the sale of €850m in non-performing loans to Cerbus at an 18pc discount.

The portfolio consists of loans linked to over 1,000 customers and 2,800 assets.

The collateral is mainly buy-to-let and investment properties but includes a limited amount of farm land.

Online Editors

Also in Business