Costs to increase further at AIB on the back of tracker mortgage scandal

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Costs to increase further at AIB on the back of tracker mortgage scandal


Colin Hunt has delivered his first trading update as CEO of AIB
Colin Hunt has delivered his first trading update as CEO of AIB

AIB expects to incur exceptional costs in 2019 as a result of the tracker mortgage scandal and “business restructuring projects”.

In a trading update the bank said costs would increase as the tracker mortgage examination programme reaches its final stages.

Meanwhile, trading at AIB in the first three months of this year was “in line with expectations”.

During the period lending at the bank increased 11pc.

In the Republic of Ireland mortgage lending increased 9pc, and the bank’s market share of mortgage drawdowns in the three months to 31 March was 31.4pc.

Net interest margin – a key barometer of a bank’s performance – increased to 2.5pc from 2.48pc.

The bank’s non-performing loans reduced by 21pc to €4.8bn from €6.1bn at year end. This includes a €1bn non-performing loan sale.

Colin Hunt, chief executive of AIB, said: “In this, my first update on the trading performance of AIB, I’m delighted to confirm that we have had a good start to 2019 with solid profitability, strong new lending and continued performing loan book growth.”

“Asset quality continued to improve with significant reduction in non-performing exposures (NPEs) putting us firmly on track to reach the milestone of circa 5pc by end 2019. We remain focused on our Customer First strategy and in April we were pleased to enhance our customer propositions in both our digital agenda, through our joint venture (JV) acquisition of Payzone, and market leading mortgage offering.”

Customer accounts of €68.1bn increased from €67.7bn at December 2018.

Meanwhile, operating costs during the period were up year-on-year, due to wage inflation and investment in loan restructuring.

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