AIB welcomes 'strong' start to 2025 despite lower interest rate environment 

Colin Hunt, CEO AIB Group 

AIB's gross loans rose to more than €71bn in the first three months of 2025, with new lending rising by 14%, the bank said on Thursday.

Reiterating its guidance for 2025, AIB said it has entered 2025 in a position of strength with "great momentum" in its business.

The lender's net interest income, the difference between the rate at which AIB borrows and the rate it charges on loans, fell by 8% compared to the same period last year to €950m, despite the rise in new lending, with consecutive rate cuts from the European Central Bank hurting margins.

AIB said that it still expects to deliver full-year net interest income of more than €3.6bn, even though it now sees the ECB cutting its main deposit rate to 1.75% by the end of the year, having previously expected it to fall to just 2%.

Despite the increase in new lending, AIB saw its mortgage market share fall to 34%, down from 36% at the end of 2024, after likely losing ground to rival PTSB, which saw its share of the Irish mortgage market rise to 20%, it said this week, up from just 16% at the end of last year. 

"Notwithstanding the uncertainty in the international external environment, we remain confident in our outlook for 2025 and beyond given our customer franchise, resilient revenues and strong funding and capital," said AIB chief executive Colin Hunt. 

"The Irish economy continues to perform well. We are implementing our proven strategy at pace and remain on course to deliver strong, sustainable returns to our shareholders, both this year and over the medium-term.”

Speaking to the Irish Examiner earlier this year, Mr Hunt said AIB's profitability would be lower in the next few years as it adjusts to a lower interest rate environment, but that it would remain one of the "best-performing banks," delivering a return on tangible equity (RoTE) of 15%. 

In March, AIB posted a record annual profit haul of €2.35bn for 2024 after tapping into the surge in European Central Bank interest rates, while facing little competition domestically to offer attractive deposits.

The bank said it is currently in the second year of its three-year strategic cycle, adding that it remains mindful of "evolving uncertainty in the external environment and continues to manage our business prudently." 

"The outlook for the domestic economy remains supportive, underpinned by high employment and population growth.

"AIB is well-positioned for the future with a resilient and growing balance sheet, diversifying income and an exceptional customer franchise. Following a strong first quarter, we remain confident in our outlook for 2025 and beyond."

AIB will have its annual general meeting today, Thursday, where it will seek shareholder approval to execute a previously announced €1.2bn buyback on a directed basis.