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(Alliance News) - AIB Group PLC on Wednesday reported a swing to a profit in the first half of 2021 after clawing back loan loss provisions on a strengthening Irish economy.
The Dublin-based bank made total operating income of EUR1.17 billion in the period, down 1.3% year-on-year from EUR1.19 billion. Pretax profit came in at EUR291 million, versus a EUR909 million loss a year ago.
Profit was helped by a net credit impairment writeback of EUR103 million, as the lender unwinds Covid-related bad loan provisions "due to a more favourable economic environment and improved credit quality." In the first half of 2020, AIB recorded a net credit impairment charge of EUR1.2 billion.
Shares were up 2.0% to 188.17 pence in London on Wednesday morning.
"Reflecting the improving economic environment...I am pleased to report a return to profitability for the group for the first half of 2021 with the fundamentals of our business remaining strong, underpinned by our solid balance sheet and robust capital base," Chief Executive Colin Hunt said.
AIB confirmed its full-year guidance for a "moderate decline" in organic net interest income and a "marginal decline" in organic costs.
But medium-term targets were revised because of the improved economic outlook, growth opportunities and progress in strategy, AIB said. The lender now expects an absolute cost base of less than EUR1.48 billion instead of less than EUR1.35 billion, reflecting the "impact of inorganic initiatives". The common equity tier 1 ratio will be less than 13.5% instead of less than 14%. Return on tangible equity will be less than 9%, up from less than 8%.
AIB said it will "continue to monitor developments in relation to distribution of dividends, complying with both regulatory recommendations and adherence to our own dividend policy." The bank hasn't made a payout since 2018's 17 cents-per-share final dividend.
By Ivan Edwards; ivanedwards@alliancenews.com
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