AIB executives did not seek bonuses – Duffy

AIB chief executive David Duffy said yesterday the bank had not sought the reinstatement of bonuses from the Government earlier this year, but had sought to discuss the creation of a long-term incentive plan for when the bank was profitable and repaying the State's €20.8 billion bailout.

“There was no request for a bonus,” Mr Duffy told media at the publication of AIB’s annual results. He added the board of the bank looked at what long-term incentives might be put in place when AIB was back profit and repaying its State aid.

No bonus demand
"That's exactly what the debate was. There is no bonus requirement for this year, no executive demand for it. We are all people who are here for principle and pride, so at the end of the day not one of us are driving bonuses."

Mr Duffy took a pay cut last year, receiving €489,000 compared with €546,000 in 2012. His pay last year comprised a salary of €425,000 and a €64,000 pension payment.

Yet again, Mr Duffy was not the best-paid executive director at the bank. Bernard Byrne, the bank's head of personal business and corporate banking, received total pay of €490,000 last year, compared with €553,000 in 2012. His package last year comprised a salary of €361,000, taxable benefits of €30,000, and a €99,000 pension contribution.

Total payments unchanged
The remuneration of chairman David Hodgkinson was unchanged at €275,000, while total payments to all board members last year was unchanged at €2.4 million.

Mr Duffy’s contract expires at the end of this year and he is “going to commit [to stay on] on the existing terms”.

“ I have never asked for anything else. I’m really not that stressed about it. I have always viewed this as a five- year job at a minimum because it will take that long to get a turnaround.”

AIB’s loss more than halved last year to €1.6 billion. Its accumulated losses since 2009 now amount to €20.2 billion.

The bank made an operating profit of €227 million last year compared with a loss of €1.2 billion in 2012. However, it was dragged into the red by provisions of €1.9 billion. The level of provisions was down 25 per cent on 2012.

Its accumulated provisions for bad loans amounts to €24.6 billion since 2009, but the bank said that 2013 would mark the last year of such “multi-billion” losses being recorded due to the improved economic outlook, rising property prices, and improved arrears.

Its impaired loans, together with past-due but not impaired loans, decreased by €1 billion last year.

AIB’s total operating income rose by 34 per cent to €1.9 billion, while its net interest margin increased to 1.37 per cent from 1.22 per cent in 2012.

The bank’s operating expenses declined by 16 per cent or €278 million, with staff costs down 18 per cent last year. About 3,600 staff have left the bank on voluntary severance terms since June 2012 . Mr Duffy expects AIB to return to profit this year and wants to tidy up its capital structure with a view to attracting external investment from the first half of 2015.

Mr Duffy said the bank would lend between €7 billion and €10 billion annually for the next five years as the Irish economic recovery continues.

Mr Hodgkinson said AIB was “robustly capitalised” and well placed to successfully navigate the euro-wide stress tests later this year.

“Unless external extenuating circumstances beyond our control dictate otherwise, I do not envisage any change in that situation,” he said in his annual report statement.