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(Alliance News) - AIB Group PLC on Thursday posted a deterioration in its financial results for the first half of 2020 as it lowered its guidance for the full year.
Shares in the Irish lender were trading 8.8% lower at EUR1.08 each on Thursday afternoon in London.
AIB said pretax loss for the six months ended June 30 was EUR909 million, swinging from a profit of EUR436 million a year prior. Net interest income was down 8% year-on-year to EUR967 million from EUR1.05 billion.
The Dublin-based bank's performing loan book as at June 30 reduced by EUR2 billion to EUR56.8 billion. New lending fell 27% to EU4.4 billion and non-performing loans rose 14% to EUR3.8 billion.
Net interest margin was 2.1%, down 2.1% a year before and from the 2.3% exit rate from the fourth quarter of 2019.
The bank said it took a EUR1.2 billion expected credit loss charge due to the impact across all its portfolios from the decline in the economic outlook caused by the Covid-19 pandemic
Looking ahead, AIB said expects net interest income for the full year to be EUR1.9 billion, 5% lower than earlier expectations of around EUR2.0 billion.
"We continue to manage costs within our control and expect full year cost inflation, driven by depreciation of around 2% in line with previous guidance. Following the first half [expected credit loss] charge of almost 200 basis points, we anticipate that the full year 2020 ECL charge is likely to be in the range of 235-250 basis points based on our current view of macroeconomic scenarios. We believe our ECL approach is conservative, forward looking and comprehensive, therefore we expect a return to a more normalised charge in 2021 and beyond," AIB said.
The bank highlighted the strength of its capital position, with a reported CET1 ratio of 16.4%, above its target of more than 14%.
By Ife Taiwo; ifetaiwo@alliancenews.com
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