AIB chief executive Colin Hunt said the bank was moving forward on a deal that will see it participate in the Ulster Bank split as it recorded a net loss of € 741m for 2020, reflecting a level high charges for expected loan losses. in the year hit by the Covid.
It was revealed last month that the government had mobilized its state-owned banks, AIB and Permanent TSB, to play an important role in acquiring the € 20 billion of Ulster Bank’s loan portfolios, after the lender said he was leaving the Republic’s banking market. .
For AIB’s part, the 71% state-owned bank had signed a start-up deal with Ulster’s parent company NatWest to buy € 4 billion of its business loans.
Chief Executive Colin Hunt said the deal could be done in the coming months.
In its 2020 earnings statement, AIB didn’t say much new about the deal other than confirmation that some Ulster staff would be transferred to AIB as part of the loan transfer.
Many experts say the acquisition will only strengthen the power of AIB and Bank of Ireland in the banking market.
AIB’s financial results showed the fallout from the Covid economic crisis on the bank.
It recorded net interest income of 1.87 billion euros, compared to 2 billion euros in the pre-Covid 2019 year, and a charge of 1.46 billion euros for expected credit losses, as well as one-off charges of 215 million euros which included compensation for the industry-wide mortgage scandal.
The net loss of € 741 million over the year against a profit of € 365 million in 2019.
The fallout from Covid for its mortgage and professional clients resulted in AIB’s loan portfolio shrinking to € 59.5 billion, after an increase in non-performing loans.
Like other banks, AIB said mortgages had held up well, after a much feared drop in Irish house prices at the start of the crisis did not materialize.
However, AIB said its new mortgages fell 21% to € 2.3 billion during the year, although the bank retained a significant share of nearly 28.5% of the loan market. real estate.
New loans to small businesses remained unchanged from 2019, he said.
On outlook, the bank said the Covid Level 5 lockdown had delayed economic recovery but saw the rollout of vaccines and a large build-up of household savings as the basis for “a sustained recovery as it unfolds. as the year progresses “.
And he said he plans to start paying shareholders dividends again.
Acquiring broker Goodbody will help him increase his fee income, he said.
“While in the near term uncertainty remains high, overall we remain positive about our return to profitability in 2021 and a resumption of normal dividend distributions in line with regulatory guidelines,” the lender said. .
“I am pleased to report that the fundamentals of our business remain strong, sustainable and strong,” said Mr. Hunt.