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LONDON (Alliance News) - Irish lender AIB Group PLC said it performed well in 2018, seeing growth in loan book and remaining on track to hit medium term targets.
Allied Irish Banks also proposed a 17 euro cents dividend. The EUR461 million payout is a 41% increase on the EUR326 million distributed in 2017.
For 2018, AIB reported a 4.6% decrease in pretax profit to EUR1.25 billion from EUR1.31 billion in 2017. The lender's operating profit decreased 10% to EUR1.40 billion from EUR1.56 billion.
AIB's net interest income decreased slightly to EUR2.10 billion from EUR2.12 billion in 2017.
The lender ended 2018 with a net interest margin of 2.48%. AIB previously guided for a medium term NIM target of 2.40%.
"Our 2018 net interest margin, net interest income and costs are on track with our medium term targets and our underlying capital generation has helped us in reaching our objective of normalising our proposed level of annual dividend payment," said Chief Executive Bernard Byrne.
AIB said: "Leading indicators of activity have softened in recent months, both internationally and in Ireland. Furthermore, downside risks have increased for the global economy, while much uncertainty still persists in relation to Brexit. The Irish economy is still expected to continue to expand in 2019 with growth forecast at about 4% for the year."
The bank's loans & advances to customers increased marginally to EUR60.88 billion. AIB's loans & advances to banks increased 35% to EUR8.65 billion from EUR6.40 billion the year before.
AIB's net loans increased 1.5% to EUR60.9 billion, with new loans exceeding redemptions.
AIB's total new lending increased 15% to EUR12.1 billion, with new term lending increasing 13% and transactional lending increasing 26%.
The bank's new mortgage lending increased 16% to EUR2.8 billion, with its market share broadly flat at 32%.
AIB's non-performing loans decreased 40% to EUR6.1 billion in 2018, now totalling 9.6% of total loans. The lender said reducing non-performing loans further remains a "key focus" and said it is on track to meet its target of about 5% by the end of 2019.
The lender's customer account deposits were broadly flat at EUR36.67 billion.
AIB's fully loaded CET1 ratio at the end of 2018 was 17.5%, flat on the year before.
"In this my last report on the performance of AIB, I am fortunate to be able to highlight another year of strong operational and financial performance. Across all the key metrics, by which we judge ourselves, the business has performed well during the year. The quality of the balance sheet continues to improve as we work through our legacy non-performing exposures," said Byrne.
The lender also announced it has promoted Deputy Chief Financial Officer Donal Galvin to chief financial officer, with immediate effect.
The regulatory process to hire new Chief Executive Colin Hunt is "progressing well" and expected to be completed shortly.
Looking ahead, AIB said it is "well positioned" with a "favourable" economic backdrop, despite the increased uncertainty caused by Brexit.
The bank said: "The uncertainty around Brexit would appear to have resulted in postponed investment decisions, particularly in SME communities in both Ireland and the UK. Adopting a vigilant approach to Brexit, we have planned for a range of economic scenarios, assessing potential impacts on our business and customers, keeping our risk appetite under review and carefully monitoring asset quality indicators from both regional and sector perspectives. Our team of 26 Brexit advisors also continue to work closely with our Irish and UK-based customers to better understand and advise on the potential implications of Brexit on their businesses. Our balance sheet strength and strong capital base will allow us to support our customers."
Shares in AIB were down 1.7% at EUR4.08 each.
