AIB becomes first Irish lender to kick off Covid – 19 writebacks

Allied Irish Banks (AIB) became the first Irish bank to unwind provisions on bad loans related to the COVID-19 crisis. This is after its first half return to profit included a net credit impairment writeback of 103 million euros. The bank posted a half-year pretax profit of 291 million euros ($345.62 million).

Ireland’s other dominant lender, Bank of Ireland, took a further impairment charge in the first half, albeit just 1 million euros. AIB Chief Financial Officer Donal Galvin told in an interview that they probably took a bigger provision than most and as the year has progressed, the macro-environment has improved and as customers and individuals perform to terms, they naturally get recoveries on position that have been provided for. He added that they are not by any stretch saying they are out of the woods and really, he would say the impact of COVID is still unknown on individuals and corporates so they have maintained an element of conservatism.

Galvin said AIB would probably add a smaller writeback in the second half. Because the bank forecast was on track to deliver on full year analyst expectations for income. This was stable in the first half and costs, which fell by 1%. Galvin said that the bank made a dividend accrual of 30 basis points of Core Tier 1 capital to reflect its strong intention to resume distributions to shareholders as soon as the first quarter of 2022. It also said that it plans to deliver sustainable profit returns on shareholders’ equity of 9% from 2023.