AIB to look again 'at future shape' of the bank after Covid
AIB has paused plans for a voluntary redundancy scheme but will look again “at the future shape” of the business to prepare for changes brought on by the Covid-19 economic shock.
It comes as the bank posted a net loss of €700m in the first six months of the year as provision charges raced up to €1.2bn due to the fallout from the pandemic. New lending shrunk by 27% in the period.
Chief executive Colin Hunt said that AIB was sticking with an earlier target to have around 8,000 staff by the end of 2022 compared with 9,300 who currently work at the group, stressing the target also takes into account the normal process of retirements and natural departures over the coming years.
The bank -- which is 71% owned by the Government -- has frozen plans for its voluntary redundancy package because of the Covid crisis but was not revising the end-2022 target for staff numbers.
The lender also said, however, that “while our strategic priorities and medium-term financial targets remain unchanged, the challenge to achieve these is greater”.
“As part of our annual business planning process this year we are considering the future shape of our business and our ways of working in order to adjust to the financial impact of Covid-19 so that AIB maintains a strong and resilient balance sheet, generates sustainable profits and returns capital to our shareholders,” the bank said.
Mr Hunt said the planning process was about responding to Covid’s long term impact on its operations but that he was committed to a branch network and that there were costs across the bank that were not linked to running branches.
“The operating environment is going to be fundamentally different; it is going to be more digital; it is going to be more remote in terms of the ways of working and sustainability is going to be ever more important,” Mr Hunt said.
The CEO said that he didn’t believe that the country was heading into another arrears crisis.
The bank has currently 14,557 mortgage payment breaks.
He said that the new mortgage lending rules since the last financial crisis have boosted the quality of lending and the bank was not expecting “the sort of sustained collapse in economic activity” nor the “sustained collapse in property valuations” of the 2008 crisis.
“It is worth bearing in mind in relation to what is happening in the property market, notwithstanding the fact that we have had an income shock and an unemployment shock, there still is a significant imbalance between the amount of housing that is demanded and the amount of housing that is available,” Mr Hunt said.
He said the bank would have expected mid-single declines in property prices this year and next year, "and if anything the property market is more resilient than we would have expected". "I don’t think we are anywhere near looking at a new mortgage arrears crisis,” he said.
On SME lending, Mr Hunt said that it will launch its lending product under the Government’s €2bn loans scheme this month.
He said supporting SMEs was critical to the economy.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
