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Thu, Mar 5, 2015
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AIB bounces back with a €1.1 billion annual pre-tax profit
Bank records first profit sinces financial crash in 2008
AIB said the number of Irish owner occupied mortgage accounts in arrears declined by 22 per cent during the year
AIB said the number of Irish owner occupied mortgage accounts in arrears declined by 22 per cent during the year
Ciarán Hancock
Topics:
Business
Financial Services
Banking
AIB
Thu, Mar 5, 2015, 08:16
First published: Thu, Mar 5, 2015, 07:14
AIB made a pre-tax profit of €1.1 billion in 2014, according to full-year results published on Thursday. This compared with a loss of €1.7 million in 2013.
This was its first profit since the crash in 2008. The bank said new lending rose by 37 per cent to €13.2 billion while total impaired loans decreased by 23 per cent since December 2013.
AIB’s board has also approved a cash dividend to the State on the 2009 Preference Shares of €280 million. This is the first time it has paid a dividend on these shares and it will be paid on May 13th.
PTSB Group chief executive Jeremy Masding: it appears that investors are warming to the idea of taking a punt on the company, helped by the recent renaissance of the Irish economy. Photograph: Alan Betson/The Irish TimesState-owned banks reach critical point in recuperation
In January, AIB announced plans to outsource 170 staff in its IT division. This involves outsourcing three elements of its IT services – telecoms, operations security, and hosting and storage. Photograph: ThinkstockStaff at AIB’s telecoms unit agree deal on outsourcing to Eircom
AIB recently outsourced a large number of support roles to the Noonan Group. Photograph: Bryan O’BrienAIB ponders outsourcing of up to 32 roles in Sandyford
Separately, AIB’s annual report shows that Bernard Byrne, who heads its personal, business and corporate activities and is tipped to succeed David Duffy as chief executive, was the best paid director last year with total remuneration of €570,000. This comprised a salary of €450,000, annual taxable benefits of €30,000 and a pension contribution of €90,000.
Mr Duffy’s remuneration totalled €489,000 – comprising a salary of €425,000 and a pension payment of €64,000. Finance chief Mark Bourke, who joined the bank in May of last year, was paid €337,000.
AIB said the number of Irish owner occupied mortgage accounts in arrears declined by 22 per cent in the year. The bank had a total provision writeback of €188 million in 2014 compared to €1.9 billion charge in 2013 reflecting the improved economic environment and progress in restructuring of impaired loans.
Total income rose by 31 per cent to €2.5 billion with its Irish and UK businesses both profitable in the year.
Commenting on the results, chief executive David Duffy said: “2014 saw AIB successfully execute its three-year plan to deliver a bank that is sustainably profitable, adequately capitalised and appropriately funded.”
AIB’s results showed continued improvement in its net interest margin, a key measure of profitability. In the second half of 2014, its NIM rose to 1.78 per cent from 1.45 per cent a year earlier.
The bank’s operating expenses declined by 5 per cent or €67 million.
AIB said discussions “continue” with the Department of Finance regarding the appropriate capital structure for the bank in the context of regulatory and market requirements.
These are focused on options in relation to the €3.5 billion 2009 Preference Shares, including the possible conversion into ordinary shares of part or all of them.
It is also looking at options in relation to the €1.6 billion of contingent capital notes (CoCos), which mature in July 2016 and a possible significant consolidation in the number of ordinary shares in issue given AIB currently has more than 523 billion ordinary shares in issue.
Based on the closing share price on March 3rd, AIB trades on a valuation multiple of about 6 times (excluding the 2009 Preference Shares) the net asset value of the Group as at 31 December 2014.
“The Group continues to note that the median for comparable European banks is circa 1 times NAV,” the bank added.