2nd Aug 2024 09:30
(Alliance News) - AIB Group PLC's earnings beat expectations across the board, and the lender raised its outlook and plots a buyback to reduce the Irish government's stake further.
For the half-year ended June 30, the Dublin-based lender reported total operating income of EUR2.48 billion on an IFRS basis, a rise of 13% from EUR2.20 billion a year prior. Net interest income alone surged 18% on-year to EUR2.08 billion.
On a "management performance" basis, which excludes some minor items from the "other income" calculation, total operating income rose 12% to EUR2.47 billion from EUR2.21 billion a year earlier.
This outcome beat Irish broker Davy's prediction, as well as company-compiled consensus, by 5%.
Davy added: "Other income was EUR395 million, 12% and 8% ahead of Davy and consensus respectively. Operating costs in H1 were modestly lower than Davy and consensus, while impairment charges at EUR61 million were also favourable."
The broker gad predicted impairment charges of EUR88 million, while consensus was for EUR84 million.
Pretax profit jumped 31% year-on-year to EUR1.29 billion from EUR987 million. Net profit totalled EUR1.11 billion, rising 30% from EUR854 million. Net profit beat Davy's prediction of EUR950 million, and consensus of EUR1 billion.
Looking to the full-year, AIB now expects net interest income of around EUR4.0 billion, its outlook raised from the over EUR3.65 billion it previously predicted.
"Guidance is therefore running 7% and 5% ahead of Davy and company consensus respectively for profit after tax," Davy added.
Chief Executive Colin Hunt said: "AIB Group delivered a very strong financial performance with profit after tax of EUR1.1 billion in the first half of the year as we embed our strategic priorities of enhancing our customer focus, further greening our business and driving greater operational efficiency. Given our strong capital position, we are pleased to announce our first post-[great financial crisis] mid-year distribution, with discussions underway with the Department of Finance for a EUR500m directed share buyback, which would bring payments to the state to EUR3 billion so far this year."
AIB said it received regulatory approval for a EUR505 million share buyback. It said it intends to put EUR500 million of that into a directed share buyback with the Irish government, eating into the state's holding in the company further.
At current prices, the EUR500 million would represent roughly a 4% chunk of AIB shares. AIB shares rose 0.3% to 430.75 pence each in London on Friday morning, giving it a market capitalisation of EUR12.31 billion.
The state's stake in AIB was trimmed to 25.5% in June. It had stood at just under 40.8% at the end of December.
The Irish government stepped in to buy a stake in AIB in 2009 amid the global financial crisis.
The state pumped a total of EUR29.4 billion into AIB, Bank of Ireland Group PLC, and Permanent TSB Group Holdings PLC over 2009 to 2011.
By Eric Cunha, Alliance News news editor
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