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AIB sees €477m profit in 2022, expects “upside” to income despite costs


AIB Chief Executive Colin Hunt. Photo: Gerry Mooney

AIB Chief Executive Colin Hunt. Photo: Gerry Mooney

AIB Chief Executive Colin Hunt. Photo: Gerry Mooney

AIB has reported an after-tax profit of €477m in the six months to June, and signalled potentially higher returns later in the year on the back of buoyant income.

The bank recently reversed a decision to make 70 of its branches cashless.

Profits included a claw back of €309m from repayments and cash set aside to cover potential losses. 

Total income was up 8pc to €1.3bn in the period, compared to the first half of 2021, while net interest income was up 2pc to €895m.

Other income was up 26pc, including €33m for stockbrokers Goodbody, while net fee and commission income increased by 35pc, AIB said in its half-yearly results on Friday.

The bank said its balance sheet is now “geared towards higher interest rates” after recent European Central Bank and Bank of England hikes.

AIB now expects net interest income to rise by 10pc this year, compared to 2021.

It expects higher costs of around €1.6bn due to inflation, a higher wage bill and new business, with customer loans expected to grow 5-6pc.

The bank may increase its return on equity target give the “significant momentum in income” AIB chief executive Colin Hunt said.

“Against the backdrop of ongoing economic uncertainty, AIB has reported a solid set of financial results for the first six months of the year, demonstrating the Group’s ongoing stability and strength,” chief executive officer Colin Hunt.

"Given the changing banking landscape and evolving operating environment, our medium-term targets are under review and we will update the market in due course.

“We see upside potential to our [return on equity] target, with the significant momentum we are seeing in income offset to some extent by cost inflation.”

While capital strength has taken a 1.3pc hit from the impact of Ulster Bank corporate and commercial loans – with €0.2bn migrating in June - it is still maintained at 15.3pc (fully loaded core equity tier 1 capital).

AIB has opened 205,000 new bank accounts so far this year, 110pc up on the first half of 2021, and is recruiting up to 700 temporary staff to deal with the Ulster Bank migration.

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New lending was up 20pc to €5.4bn in the first half of the year, with green lending at €1.3bn now representing 23pc of the total.

Mortgage drawdowns were up 59pc to €1.7bn, representing a market share of 31pc.

Costs were up 6pc to €0.8bn, with a wage agreement in place for a 10pc increase over three years.

Performing loans increased by €0.8bn to €56.1bn, while of Ulster Bank corporate and commercial loans migrated to AIB by the end of June.

The bank has also reduced its non-performing loans by 22pc to €2.4bn, which now make up just 4.2pc of gross loans, down from 5.4pc in December 2021.

Legacy non-performing loans fell to 0.6pc of gross loans.

Customer deposits increased 3pc to €95.9bn.

AIB completed a €91m share buyback in May.

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