AIB profits raise state-aid payback hope

AIB’s better-than-forecast pre-tax profit for the first half of the year has increased expectations that it will start paying back the State’s €20bn investment sooner than envisaged.

The 99.8% state-owned bank reported a first-half profit of €437m, which is a €1.3bn improvement on the same period in 2013. The vastly-improved performance came on the back of much higher net interest income and a massive drop in bad debt provisions. AIB chief executive, David Duffy, said the bank was in a good position to pass the ECB stress tests later this year.

Total income for the six-month period was up 36% to €1.25bn. There was a significant improvement in one of the bank’s key performance metrics: the net interest margin. This margin over the period was 1.6%, compared with 1.28% for 2013. The net interest margin is the difference between what it charges on its lending and the interest it pays for its deposits.