AIB shares slip despite 'solid' start to year

Breakingnews

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01 May 2019 18:57

Shares in AIB slipped 1% as the bank said that profits were “solid” in the first three months of the year despite the uncertainties of Brexit.

However, in a trading update, it said it will have exceptional costs this year, reflecting a recent reorganisation at the bank and the conclusion of a tracker mortgage investigation. The bank has put aside €263m to cover the costs of compensation and redress for its part in the industry-wide tracker scandal.

Such reserves do not include any potential fines from the Central Bank.

Net interest margin — a key measure of banking costs and profitability — edged higher to 2.5% through the first quarter.

The Irish economy looks set to continue to grow at a healthy pace notwithstanding Brexit uncertainty,” said AIB.

Broker Davy said AIB was well on its way to reaching its interim target of reducing non-performing loans by the end of the year. The bank’s corporate and consumer lending is “strong, although SME lending remains somewhat subdued”, said the broker.

Meanwhile, the Central Bank said its mortgage lending rules and other measures to protect against any renewed crash are justified by the still large exposure to residential mortgages by Irish banks. It said Irish lenders have a greater share of residential property loans compared with other European banks but that the banking system is better placed to absorb shocks.

“The high degree of exposure to real estate in the Irish banking system underlines the importance of prudent underwriting by the banking system,” it said.

ORIGINAL POST

breakingnews business added by Rajan Marshall

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