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(Alliance News) -Â AIB Group PLC on Friday reported a swing to loss in 2020 amid a challenging operating environment for European banks, with a continued low interest rate backdrop and Covid-19 uncertainty.
Total income for 2020 fell 12% to EUR2.4 billion, reflecting a 10% decline in net interest income to EUR1.87 billion and a 19% decrease in 'other' income to EUR499 million. The lower interest rate environment was a key driver of the net interest income decline, the Irish bank said.
AIB's net interest margin of 1.94% was down from 2.37% in 2019.
AIB swung to a pretax loss of EUR931 million from a profit of EUR499 million the year before, taking a net credit impairment charge of EUR1.46 billion from just EUR16 million in 2019.
The impairment reflects a deterioration in economic outlook, credit downgrades particularly in
sectors hit by Covid-19 and post model adjustments for expected pandemic impacts and legacy nonperforming mortgage exposures.
"Today we announce full year results that have been shaped by Covid-19. I am pleased to report that the fundamentals of our business remain robust, sustainable and strong. We entered this crisis in a position of capital strength which, enabled by our leading digital technology, allowed us to deliver unprecedented levels of support to our customers, communities and the economy when it mattered most," said Chief Executive Colin Hunt.
"Now, I look forward with confidence as we implement our strategy to 2023 at pace, demonstrated by our growth initiatives announced this year."
AIB said that while uncertainty remains high in the new year, it is overall positive about a return to profitability in 2021 and a resumption of normal dividend distributions in line with regulatory guidelines.
The company will not recommend any dividend for 2020 given its financial performance.
Shares in AIB were down 1.1% at 166.40 pence in London on Friday.
By Lucy Heming;Â lucyheming@alliancenews.com
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