Focus falls on AIB as banks account for Covid-19 costs

The focus turns on the way Irish banks are weathering the early stages of the Covid-19 economic storm as AIB hosts its annual shareholders’ meeting by video conference on Wednesday morning.

There are over 1 million people in receipt in some form of Government Covid-19 related payment or are unemployed in the Republic and investors are focusing on how Irish and other European banks will handle the inevitable rise in soured loans in the coming months.

AIB, however, is not expected to update the market fully on the financial effects of Covid-19 until next month.

Meanwhile, UK-based HSBC Holdings warned of more earnings pain ahead as it set aside a hefty $3bn (€2.7bn) in bad loan provisions due to the pandemic, while Spain’s Santander posted an 82% slump in quarterly net profit.

“We’ve come to a point with regard to European banks where expectations have fallen so much because of the uncertainty, but the earnings look stable excluding the loan loss provisions,” said Craig Erlam, senior market analyst, at Oanda. “It’s a huge week for earnings, and another milestone that we need pass in order to continue to put a floor beneath prices in equity markets,” he said.

HSBC’’s warning came as Europe’s biggest bank said the outbreak would mean sustained pressure on its revenues as customer activity declined and lower interest rates squeezed margins, while noting increased fraudulent activity could lead to “potentially significant” credit losses.

- Additional reporting by Reuters