12th May 2020 10:52
(Alliance News) - AIB Group PLC on Tuesday reported a drop in first quarter net interest income, abandoned its annual guidance, and said that it will take further credit provisions in the second quarter of 2020.
The Irish lender said net interest income in the three months to March-end fell 5% year-on-year, principally due to lower average customer loan volumes and lower yields on investment securities.
Net interest margin in the quarter was 2.19%, six basis points lower than 2.25% in the fourth quarter of 2019.
AIB took EUR210 million in credit provisions for the first quarter, primarily as a result of "changes in macroeconomic assumptions due to Covid-19 impact," with further impact of the crisis expected to be felt in the second quarter.
The bank's performing loan book reduced to EUR57.8 billion at the end March from EUR58.8 billion in December 2019. New lending in the first quarter reduced 12% year-on-year.
Gross loans totalled EUR61.4 billion, down EUR700 million due to redemptions exceeding new lending and negative foreign exchange rate movements.
AIB said its detailed guidance in relation to its expected performance in 2020 should not be considered current in the situation and that it will provide an updated guidance alongside its interim results once it has a "better understanding of how this crisis is likely to unfold".
The Dublin-based company expects to incur exceptional costs in 2020 in the range of EUR150 million to EUR175 million including costs relating to restitution and operating costs associated with the tracker mortgage examination programme.
Shares in AIB were up 1.8% at EUR0.95 each on Tuesday morning in London.
By Tapan Panchal; [email protected]
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