AIB has fewer customers on mortgage payment breaks than rivals but its shares fall 3.5% on Covid concerns

AIB's new mortgage and SME lending fell sharply over the first nine months, but showed "tentative signs of recovery" in the September quarter. Picture: Sam Boal/Boal/Rollingnews.ie

AIB appears to have fewer borrowers on mortgage payment breaks for its size than its rivals, but its shares fell sharply nonetheless as investors worried about the fallout from the latest Covid-19 lockdown.     

In a trading update for the period before the start of the new Level 5 restrictions, AIB said it had 3,985 mortgage payment breaks on loans worth €604m as of October 16. It also had 5,157 breaks for loans to small business customers worth around €320m at the same date. 

Earlier this week Bank of Ireland in its update, said around 6,400 of its mortgage accounts worth €1.1bn in the Republic were on payment breaks on October 16. It had also agreed with SMEs 2,800 payment breaks that were worth €800m.

The number of payment breaks is an important indicator for the financial health of all the Irish banks because it can warn of potential arrears trouble should customers not be able to resume payments if they lose their jobs during the Covid crisis. 

AIB's new mortgage and SME lending fell sharply over the first nine months, but showed "tentative signs of recovery" in the September quarter.  

Noting the large amounts of money the Government has injected into the economy to support Irish incomes, AIB said the recession has had a muted effect on Irish house prices and predicted "a very modest decline" only in prices this year.  

AIB chief executive Colin Hunt, however, also noted "the significant uncertainties which persist both domestically and internationally". The shares were down 3.5% at one stage. 

Meanwhile, Ulster Bank posted a small operating profit in the three months to the end of September but had a €244m loss for the full nine months following large impairment loan charges earlier in the year, according to an update from its owner, the NatWest Group. 

It emerged last month that NatWest is carrying out a review that may end in the winding down of Ulster Bank in the Republic. 

Ulster Bank said the number of customers on a second payment breaks accounted for 8% of its total loan book, in the September quarter. 

On the review, "in the event of any changes being made to our strategy, these would be undertaken with full consideration of any impact on customers, colleagues, and shareholders in the first instance," NatWest said in Friday's update.