AIB returns to profit in 2021, announces dividend

AIB Group saw a 2021 profit of 645 million euros after taxes, according to its full-year results, allowing it to start paying dividends again.

Share holders will receive an ordinary cash dividend of €122 million and a share buyback of €91 million.

Net interest income is down 4 percent in 2020 to just under 1.8 billion euros as the bank adjusts to negative rates, lower average loan volumes and excess liquidity.

The bank continues to pass on negative interest rates, with 12 billion euros of deposits charged at negative rates by the end of 2020, more than double the rate a year earlier.

Total new loans grew by 13pc to 10.4 billion euros, in a strong second half, with mortgages up 25 per cent in Ireland to 10.5 billion euros. New mortgage lending in Ireland grew by 26 per cent last year, with AIB now holding almost a third of the mortgage market here.

However, new consumer lending fell 5 per cent due to the impact of Covid-19, although AIB expects that to reverse this year.

Customer deposits increased by 13pc to 92.9 billion euros as pandemic-related savings continued to grow and together with the European Central Bank’s 10 billion euro refinancing loan it contributed to increase funding rates and liquidity.

Core equity Tier 1 fully loaded in December 2021 was 16.6 percent, up one point in 2020 on profit and provisioning.

A sensitivity analysis shows that an “immediate and sustained” one-point increase in interest rates could bring the bank 272 million euros in interest income.

Net profit margin for the full year was 1.58pc, down more than 40 basis points in 2020, due to the “false impact of excess liquidity,” the bank said in a statement.

Other income increased 18pc to €590m, including €24m for the acquisition of Goodbody.

Net fee income and commissions increase 21pc to €480m in 2020, mainly due to changes in customer behaviour.

The bank also generated 35 percent of its €230 million cost savings target by 2023.

Costs in 2021 are just over €1.5 billion, a 1 percent drop if Goodbody’s impact is not taken into account. Headcount fell 7 percent for the year, excluding Goodbody.

There was a net credit impairment record of €238 million, which the bank said reflects improved credit quality and updated macroeconomic assumptions.

EU and Irish legal costs and bank fees have risen to 162 million euros in 2021, up from 115 million euros in 2020.

The bank said it forecast strong growth in 2022.

Last year, AIB announced the acquisition of stockbroker Goodbody and the purchase of 4.2 billion euros in commercial and corporate loans by Ulster Bank. It has also indicated the closure of 15 branches.

The government announced at the end of December that it would begin selling off part of its 71pc stake in AIB. AIB returns to profit in 2021, announces dividend

Fry Electronics Team

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