(Alliance News) - AIB Group PLC on Friday reiterated its guidance for 2020 as a whole, despite posting a decline in total income for the first nine months of the year as the market backdrop remains significantly challenging.
For the nine months to the end of September, total income fell by 11% year-on-year, although the Dublin-headquartered bank noted that the result demonstrated a greater level of resilience than anticipated at the onset of the Covid-19 crises earlier in the year.
Net interest income dropped by 9%, attributed to a lower interest rate environment, reduced loan volumes and lower income on investment securities.
For the three months to the end of September, AIB's net interest margin was 1.91%, down from 2.01% in the second quarter.
Meanwhile, other income for the period was down 18%, due to a 16% fall in fees and commission income as a result of reduced economic activity and changes in customer behaviour.
As at September 30, gross loans decreased to EUR60.1 billion from EUR62.1 billion at the end of 2019, as a result of redemptions exceeding new lending and forex effects.
Looking ahead, AIB has kept its guidance for 2020, with net interest income to come in at EUR1.9 billion, with other income at EUR420 million and cost inflation to increase by 2% year-on-year. In addition, new lending is expected to fall by around 30% year-on-year.
"The group performed well in the third quarter and, generally speaking, economic indicators are proving more resilient than anticipated earlier this year. However, we must acknowledge and continue to be vigilant to the significant uncertainties which persist both domestically and internationally. Our strong capital position enables us to deliver on our priorities to support the Irish economy, work with our customers as they deal with the challenges of Covid-19 and Brexit, support our colleagues and play our part in the communities in which we serve," said Chief Executive Officer Colin Hunt.
Shares in AIB were down 2.3% at EUR0.96 on Friday in London.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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Aib Group (AIBG)