Analyst: AIB heading to IPO soon

Shares in AIB — which is all but fully owned by the State — could be sold in the next six to 12 months, despite some of the worst banking market conditions since the financial crash.

Focus continues on the much-delayed plans to sell an initial 25% stake in AIB, despite uncertainty generated by the Brexit vote and amid skittishness of financial markets.

Bank shares across Europe have tumbled this year, as sluggish eurozone growth has sparked new fears about the health of European banks.

The Department of Finance confirmed, yesterday, that it will retain its adviser, Rothschild, to monitor market conditions for an IPO.

Darren McKinley, analyst at Merrion Capital, said conditions were more favourable for an IPO than people assume.

“I think an IPO will occur in the next six to 12 months. The market has brushed aside its Brexit concerns. Central banks are ensuring that economies will grow. I would be surprised if AIB was not booked for a sale in the next six to 12 months,” Mr McKinley said.

The bank, in is earnings statement yesterday, hailed a scheduled repayment to the State of one of the instruments — €1.6bn in contingent capital or CoCo notes and used to underwrite AIB during the crisis — as further evidence of its return to normalcy.

Operating profits, nonetheless, fell to €753m in the first six months, from €1.26bn a year earlier, as it wrote-back much lower level of provisions. Net interest margin — a measurement of profitability — rose to 2.08%, from 1.92%.

Loan repayments continue to outpace new lending, with the net loan book having shrunk to €61.1bn, from €63.2bn at the end of December, which the bank blamed on a mortgage market half its normal size.

Chief executive, Bernard Byrne, was, however, reluctant to disclose the number of mortgage customers who would be offered restitution for being charged too much or for being shifted from guaranteed tracker rates.

Last year, the bank booked a provision of €190m, including €105m for refunds in interest commission and other compensation, relating to a Central Bank probe.