AIB considering resumption of dividends on the back of improving economic outlook

Colin Hunt, the CEO of AIB, says the bank will consider the resumption of dividends for 2021 on the back of increasing confidence about the economic outlook and “our ability to generate sustainable shareholder returns.”

he European Central Bank (ECB) in March last year recommended a temporary halt of bank dividends and buybacks because of Covid-19.

Any payment of dividends would be subject to regulatory approval, Mr Hunt said in a trading update from AIB today.

His comments come as the State-backed bank reported “strong” profitability in the three months to September 30, with current trading “in line with expectations.”

Gross loans of €58.5bn were “broadly stable” from €58.7bn in June.

New lending at the bank of €7.2bn for the nine months to September represented 7pc growth compared to the equivalent prior year period with a pick-up in momentum in quarter three to €2.7bn.

AIB said new lending in its Capital Markets increased 20pc, with especially “strong performances” in renewable energy and property.

Small and medium business new lending to September was up 3pc, and the pipeline is “robust across a number of sectors.”

However, the bank said that new consumer lending remains “sluggish”, which it said reflected subdued credit demand.

In the Republic of Ireland, year-to-date new mortgage lending increased 17pc versus the prior year. AIB’s mortgage market share of drawdowns in the month of September was 31pc.

In the first nine months AIB’s net interest income decreased 8pc, on the back of the lower interest rate environment, lower loan volumes and excess liquidity. However, this was partially offset by momentum in the bank’s negative interest rate strategy.

As at September around €12bn of AIB’s deposits were at negative rates, up from €4.7bn at December 2020.

“I am pleased to report that the group had a strong third quarter and is performing in line with our 2021 full year guidance,” Colin Hunt, AIB chief executive, said.

“Looking to the fourth quarter and beyond, we expect the steady economic recovery to continue as our customers return to pre-pandemic levels of activity.”

AIB’s non-performing loans decreased to €3.5bn or 5.9pc of gross loans at end September.

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