Finance minister urges banks to treat customers 'fairly' as AIB posts record profits

Michael McGrath said State would directly benefit from profit to tune of €280m

Finance Minister Michael McGrath: 'It's important that all banks and non-banks treat customers fairly and that's why we have well-established systems of regulation in place. We have a consumer protection code with a code of conduct on mortgage arrears.' Picture: Cillian Sherlock/PA Wire

Finance Minister Michael McGrath has called on Irish banks to treat their customers “fairly”, as AIB reported more than €2bn in after-tax profits for 2023.

AIB, in which the State has a 40% stake, reported its after-tax profits increased by €765m compared to 2022, with the bank saying the surge in European Central Bank interest rates is driving income.

Mr McGrath said there was an existing relationship framework between the Government and the lender, meaning he cannot get involved in the day-to-day commercial running of AIB.

“They are reporting a record level of profits in 2023 and I think they would acknowledge themselves that this is a high watermark. It, of course, was contributed to by interest rate policy at Central Bank level,” Mr McGrath said.

“The State will directly benefit from the level of profits by means of the dividend payment,” he added, estimating this would be about €280m to the exchequer.

When asked, however, if AIB was doing enough for its customers, Mr McGrath said he believed that banks needed to treat customers “fairly”.

From my perspective, it's important that all banks and non-banks treat customers fairly and that's why we have well-established systems of regulation in place. We have a consumer protection code with a code of conduct on mortgage arrears.

“I engage on a very regular basis with the governor of the Central Bank on matters that relate to policy, but also on the direct regulatory matters that he has responsibility for and that engagement will continue.”

Mr McGrath confirmed the Government would continue to sell off its shares in AIB, but this would be done in a “considered and a gradual way” to ensure the maximum return for the taxpayer.

He was speaking as he confirmed that the National Asset Management Agency (Nama) would be wound down by the end of 2025.

The Government’s ‘bad bank’, Nama was set up in late 2009 following the financial crisis and was used to buy up loans from five banks.

Mr McGrath confirmed due to residual activities expected at the end of Nama's lifetime, there would be a new resolution unit established within the National Treasury Management Agency to manage this from 2026 to final completion.