AIB sees tentative signs of recovery in lending despite Covid uncertainty

17,000 accounts remain on payment breaks, down from 66,000

New lending was down 24% in the nine-month period up to September 2020, but the third quarter saw tentative signs of recovery

AIB has reported a total income loss of 11% for the nine months up to September compared to the same time period last year. However, the bank said its performance results are “more resilient than expected" in the face of the Covid-19 pandemic.

New lending was down 24% in the nine-month period up to September 2020, but the third quarter saw “tentative signs of recovery” with new lending 18% lower than the same period last year. While “better than expected," redemptions continue to exceed new lending. 

New mortgage lending in Ireland reduced 25% period on period with AIB’s market share of mortgage drawdowns up to September at 30%. Renewable energy lending is the fasted growing part of the group’s balance sheet.

Irish SME new lending in the nine months to September was 3% lower than the same period last year, with “fragile” business sentiment due to the impact of COVID-19 and Brexit uncertainty given as a potential explanation for this decrease.

Payment breaks 

The bank has granted 66,000 payment breaks in retail banking, worth around €4.2 billion. As of October 16, around two thirds (74%) have rolled off with €1 billion outstanding. More than 17,000 customer accounts remain on Covid-19 payment breaks.

AIB said the level of roll-off has proved better than originally anticipated with 96% of customers on payment break 2 due to reach their expiry period by the end of 2020. The bank said it is in “continual contact” with customers to understand if further support measures may be required beyond this point.

Colin Hunt, AIB Group CEO, said the bank will provide a further update before the years end

Colin Hunt, Chief Executive AIB Group said while the group performed well last quarter and economic indicators are proving more resilient than anticipated earlier in the year, “we must acknowledge and continue to be vigilant to the significant uncertainties which persist both domestically and internationally.” 

He said the group will provide an update before the years end on the “future shape” of the business.

“While our strategic priorities and medium-term financial targets remain unchanged, the challenge to achieve these is greater in the wake of the Covid-19 health crisis,” he said.