AIB may seek further loan book sales
AIB has hinted that it could undertake further loan book sales in a bid to bring the percentage of non-performing loans on its books to within the European average.
The bank's chief executive designate Colin Hunt also said management will not be making a fresh appeal to Government to relax banking remuneration rules at its agm near the end of April. He also refused to comment on the bank's future mortgage interest rate policy.
AIB reported a pre-tax profit of €1.25bn for 2018; down from one of €1.31bn for 2017 but said it was on course to meet its medium-term targets.
The bank, which is still more than 70% owned by the State, increased its proposed annual dividend by 42% to €461m and said total new lending was up 15% to €12.1bn. Within that, new mortgage lending increased 16%.
Non-performing loans now make up €6.1bn, or 9.6%, of AIB's total lending book. The bank said it is on course to bring that percentage down to around 5% by the end of this year.
Mr Hunt, whose succeeding of outgoing CEO Bernard Byrne is expected to be finalised "shortly", said loan sales form part of AIB's overall non-performing exposure reduction plan.
The bank completed the sale of one tranche of bad loans early last year and initiated another sale of around €1bn worth of loans - under the name Project Beech - in December.
That transaction is expected to be completed during the first half of this year. Mr Hunt refused to comment on individual loan sales and didn't say if the latter was the last planned sale.
He said that supporting borrowers in difficulty remained a key focus and working towards resolving soured loans, on a case-by-case basis, would also contribute to lowering the bank's non-performing loan levels.
Mr Hunt said Sinn Féin's proposed 'no consent, no sale' bill - which would prevent banks selling loans without borrower approval - would lower bank funding and raise mortgage prices.
AIB also said that it is nearing the end of its involvement in the wider tracker mortgage overcharging scandal. The "vast majority" of affected borrowers have been reached and 99% of those it has dealt with have been reimbursed, it said.
Mr Hunt said it would be "inappropriate" to table fresh proposals on bank executive pay and bonus levels before the Government-commissioned review into the matter is published.
He said the board would not be raising the issue at the bank's agm next month. However, Mr Hunt said AIB needs to compete equally - on the remuneration front - with other financial services institutions if it wants to attract and retain skilled talent.
AIB said it has made contingency plans for Brexit, but the bank's new chief financial officer Donal Galvin warned a hard Brexit could cost the bank up to €163m.
Around 10% of AIB's balance sheet is exposed to the UK, where its SME lending levels grew by 9% last year, albeit from a low base. The bank said Brexit uncertainty has resulted in Irish and UK SMEs postponing investment decisions.
AIB shares fell by over 2% yesterday.
