Profits down 70% at AIB mortgage unit as charges rise

JOE BRENNAN

Haven Mortgages, the AIB unit that offers home loans through brokerages, posted a 70 per cent slump in pretax profits last year, to €9.4 million, as its parent hiked charges for outsourced services.

New accounts for Haven filed with the Companies Registration Office show that the lender, which AIB inherited in 2011 under its government-instructed takeover of building society EBS, saw its loan book rise by €249.1 million, or 15 per cent, to €1.88 billion as new mortgage advances outpaced repayments.

By contrast, the wider AIB group has seen its loan book contract dramatically over the past nine years.

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However, administrative expenses at Haven, which has no full-time employees of its own, surged by almost 250 per cent last year to €21.9 million, as AIB moved to increase the rates that EBS charges its subsidiary for outsourced services. This was in line with new guidelines from the Organisation for Economic Co-operation and Development (OECD).

Additional charge

“The additional charge reflects credit management, central function costs, risks borne by and assets provided by EBS in facilitating the operations of Haven,” the company said in the report.

"In addition, a small number of AIB employees maintain a parallel employment relationship with Haven, in order to facilitate delivery of outsourced services under the Outsourcing and Agency Agreement with AIB," it said.

"These employees of AIB in the Republic of Ireland have a primary employment relationship with AIB, which maintains day-to-day control over them and remains responsible for the payment of their remuneration."

Haven was established by EBS in December 2007 to focus on mortgage distribution through the intermediary market.

The latest set of accounts show that Haven’s level of impaired loans fell to 6 per cent of total loans last year from 9 per cent in 2016. The total AIB impaired loans ratio declined to 9.8 per cent last year from 13.9 per cent.