AIB's chief executive "delighted" with €1bn profit

As the bank prepares to deal with some 3,000 tracker mortgage customers who were overcharged

AIB announced a pre-tax profit of €1 billion for the first six months of the year.

While this was €200 million lower than the same period in 2015, AIB chief executive Bernard Byrne told Newstalk this morning that he was “delighted with the results”.

Its net interest margin increased by 16 basis points to 2.08%, with continued expansion expected.

The bank said the profit was driven by a strong business performance, net provision writebacks of €211 million and one-off benefits, including the sale of its share in Visa Europe. Impairments were down €1.8bn in the period.

It has achieved €6.1 billion in new lending approvals to customers so far in 2016.

AIB also confirmed a bailout repayment to the State of close to €1.8 billion. The bank has now paid €6.5 billion of the €20.8 billion bailout back to the taxpayer.

Speaking to Business Breakfast's Nick Bullman, Byrne said:

"I think the first half has shown very strong profitability...

"Half a billion from underlying activity, which is the sort of level of return we'd be expecting from a normalised position. And then a half a billion of one-off items."

He was particularly pleased with the bank's strong capital generation.

"In the last 8 months, we've repaid the State over three and a half billion of capital. So we're generating lots of capital.

"Our core equity tier one on a fully loaded basis is 13% at this stage, and the franchise is showing good underlying and one-off profitability.  So very comfortable with where we're at."

Regarding recovering lending approval rates, he said:

"We're very comfortable with the level of demand from a lending point of view and our ability to satisfy that.

"In the core Irish market, we continue to see growth across all the key segments from a lending point of view.

"So mortgage lending up, albeit a modest 3%. Personal lending up about 28%, and business and corporate lending up 12%."

However, AIB also revealed that some 3,000 of their tracker mortgage customers have been overcharged on their loans.

It follows a review of its books as part of a trawl of tracker mortgage accounts ordered by the Central Bank last December. It has set aside €190m to deal with the matter.

The bank will has pledged that they will be given financial compensation and placed on the correct rate going forward.

Byrne said of the situation:

"The news today is that we're well progressed on that project. We will start to communicate with the first groupings of customers in the course of August.

"We've had a very significant amount of work to get to this point. We hope to be substantially complete on this by the year end."