AIB UK reports surge in profits to £337m in a ‘strong financial performance’
Irish-owned lender is latest institution to report healthy results for 2023, writes Flávia Gouveia
PRE-TAX profits for AIB Group (UK) more than doubled to £337m last year after interest rates climbed to a 15-year high, its latest accounts have revealed.
According to the accounts for the Belfast-based group, which includes the lender’s operation in Northern Ireland, pre-tax profits for the year ending December 2023 more than doubled, from £130m to £337m.
The recent results mark a firm return to profitability for the bank, after it suffered a loss of £105m in 2020 due to the Covid-19 pandemic.
During last year the bank saw net income rise by 50% from £253m to £378m, while overall operating income was up by 40% from £314m to £443m.
However, according to the accounts, these gains were partially offset by a reduction in average interest earning assets and higher interest rates paid on customer deposits.
Average interest earning assets were down by £1.3bn to £9.5bn in 2023.
The drop was credited to a reduction in funding as a result of the bank’s exit from lending to SMES in Great Britain, as well as market uncertainty, inflationary and cost-of-living pressures leading to lower balances.
Customer balances at the bank saw a 23% drop, from £5.2bn to £4.1bn as a result in part of inflationary and cost-of-living pressures.
But the drop was partially offset by a 5% increase to deposits, which grew from £2.9bn to £3bn.
Costs for the bank saw small increases, with total adjusted costs up by 6% to £122m, while personnel costs were up by £4m, to £64m while admin costs were also up by £4m, to £48m.
Increases to personnel costs is explained by a 5% increase to 696 employees, and a cost-of-living payment of up to £900 which was paid to staff during the year.
In a statement submitted with the accounts, group chairman William Fall said: “The bank’s results reflect increasing net interest income due to higher income on assets following increases in the Bank of England base rate throughout 2023, strong cost management and a credit impairment writeback, due to careful and conservative portfolio management as well as an improving macroeconomic outlook combined with the disposal of non performing portfolio.”
Following a series of interest rate hikes by the Band of England in an effort to curb soaring inflation, the base rate rose to a 15-year high of 5.25% in August last year, where it still remains.
Mr Fall added: “The bank continued to grow its business in our chosen markets, having achieved £1.2bn of new lending to customers.”
While no dividend was declared last year, Mr Fall said in this statement that an ordinary dividend would be declared this year, following the bank’s strong performance.
The bank, which is the third largest lender in NI behind Danske Bank and Ulster Bank, reported that new loans were down by 2% from £1.3bn in 2022 to £1.2bn last year.
According to the accounts the drop in loans was due both to the sale of non-performing loans and a “challenging lending market”.
The lender separates its operations into two distinct markets comprising Great Britain and Northern Ireland.
In GB the bank supports “corporate customers with a comprehensive range of lending and deposit products, offering specific sector expertise”.
In Northern Ireland it offers “a