26th Oct 2018 08:57
LONDON (Alliance News) - AIB Group PLC said Friday it recorded a "strong" third quarter performance and is on track to meet its full year expectations, as Chief Executive Officer Bernard Byrne announced he will be stepping down in 2019.
Allied Irish Banks said its net interest income was "stable" in the nine months to September 30. The bank's net interest margin stood at 2.51% at September 30, versus 2.53% at June 30.
The Irish bank attributed the income stability to stable asset yields and lower funding costs. The slight drop in margin was blamed on excess liquidity. The bank said "actions" are being taken to reduce the effects of excess liquidity.
Allied Irish Banks said its customer fees & commissions were "stable" in the third quarter to September-end and in line with expectations.
The bank said its "disciplined" cost management will remain a priority for the remainder of the year, following the "trends experienced" in the first half.
Allied Irish Banks expects a net credit provision write-back in the second half, but not as much as seen in the first half.
"Following a positive financial performance in the first half, we continue to deliver strong profitability, generate capital and increase new lending. With a strong capital base, lower non-performing loans and a growing loan book the balance sheet continues to strengthen and risk profile improves," said Chief Executive Bernard Byrne.
The bank's net loans at the end of September increased to EUR60.5 billion, up EUR500 million from December.
Performing loans increased EUR3 billion in the same period to EUR56.1 billion, with coprorate & institutional businesses delivering a "very strong" performance in 2018.
Non-performing loans now represent 11% of the bank's gross loans, down from 16% in December.
Byrne added: "In October we executed a successful inaugural USD750 million minimum requirement for own funds and eligible liabilities (MREL) issuance, putting us firmly on track to meet our overall MREL requirements. As a truly purpose-led organisation we continue to evolve our operating model to align our strategy and our structure on delivering for our customers."
MREL is a regulatory measure put on banks by authorities that ensures if a bank were to fail, the MREL funds act as a buffer to absorb losses and provide new capital to the bank.
Allied Irish Banks has now completed EUR1.65 billion of its roughly EUR4 billion MREL issuance requirement.
The bank's CET1 ratio at September 30 is 17.9%, "well in excess" of its medium term target of 13%.
Allied Irish Banks believes its "strong" funding and capital management ensure it is well positioned for growth.
In 2017, Allied Irish Banks posted pretax profit of EUR1.6 billion.
In a separate announcement, Allied Irish Banks announced Chief Bernard Byrne will step down as CEO and executive director. He will remain in position "into 2019" as the bank looks for a successor.
Shares in AIB were down 5.9% at EUR3.97 each.
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