(Alliance News) - AIB Group PLC on Wednesday announced its intention to launch a EUR1 billion buyback, after posting an uplift in both net interest income and profit after tax, thanks in part to a higher interest rate environment.
For the year ended December 31, the financial services company reported net interest income of EUR3.84 billion, up from a restated EUR2.10 billion a year prior.
According to AIB, this result benefitted from a higher interest rate environment, as well as higher average customer loan volumes.
Profit after tax was EUR2.06 billion, up from EUR765 million, while earnings per share were 75.7 euro cents, up from 26.1 cents the year before.
Return on tangible equity came in "substantially" ahead of AIB's medium-term target at 25.7%, up from 9.6% thanks to "increased profitability".
"In the face of increasing interest rates, we managed to limit the effect of this on many of our borrowers at a time when they were faced with cost-of-living challenges. At the same time, and reflecting the importance to AIB of our depositors, we offered market-leading interest rates for those of our customers with surplus liquidity to invest, in a range of deposit products which they had to choose from," said Chair Jim Pettigrew.
"Balancing the needs of these two customer groups was a key focus for the board and for management during 2023 given the emphasis we place on the value of quality long-term relationships with our customers," he added.
In a separate announcement, the firm proposed a final dividend for the year of 26.568 cents per share.
It also told investors that it has decided to distribute EUR1 billion by way of a buyback.
AIB has received approval for this capital reduction from the European Central Bank, and explained on Wednesday that its preference is to undertake the buyback on a directed basis by agreement with the Minister for Finance. Discussions with the Department of Finance are currently underway.
Looking ahead, it expects more than EUR3.65 billion in net interest income in 2024, based on an ECB rate of 2.75%
AIB Group shares were trading 3.2% higher at 388.50 pence each in London on Wednesday morning.
By Holly Beveridge, Alliance News reporter
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Aib Group (AIBG)