AIB still expects to cut bad debt

AIB still expects to cut its bad debt next year, despite rising arrears and a challenging outlook for the economy, as the eurozone debt crisis rapidly worsens and Government austerity measures deepen.

Provisions for soured loans are expected to peak across Ireland’s bruised financial sector this year after the central bank said it wanted all lenders to take a tougher line on bad debt charges in time for 2011 results.

But analysts said the speed at which Irish people were falling into mortgage difficulties was worrying and an accelerated pace could mean provisions keep rising into 2012.