AIB is proposing to pay out €2.25 billion to shareholders after posting better-than-expected results, and plans to more than quadruple chief executive Colin Hunt’s remuneration after the bank returned to full private ownership last year.
The bank is proposing a €988 million final dividend on last year’s earnings, which is in addition to a €263 million interim payment to shareholders in November, it said a statement on Wednesday. It has also secured regulatory approval for a €1 billion share buyback programme, to be launched immediately.
It follows the posting of a net profit of €2.14 billion. The result was down from €2.35 billion posted in 2024, as net interest income declined 9 per cent to €3.75 billion amid falling official interest rates. Still, net interest income beat management’s own upgraded guidance from November for a figure in excess of €3.7 billion.
Benjamin Toms, an analyst with RBC Capital in London, noted that the bank’s underlying €1.17 billion pretax profit for the second half of the year beat consensus estimates by 7 per cent.
READ MORE
Shares in the group had rallied 4 per cent by midday trading in Dublin, having been under pressure in recent days as the Middle East crisis hit equities globally.
AIB also outlined plans to hike Hunt’s pay package after fixed-salary restrictions were lifted by the Government last summer as it sold its remaining shares in the group.
Hunt’s annual salary was immediately hiked to €795,000 from €500,000, effective from last August, before being increased again in January, to €1.35 million to “to be much more closely aligned to market norms”, AIB said in its annual report.
The bank also revealed that it will be using fixed share awards – with no performance conditions attached – to get around an ongoing ban on bonuses above €20,000 across Irish banks. These will be set at a maximum of 100 per cent of salary. More details on this is expected when the bank issues documents relating to its annual general meeting at the end of April.
Reaching a 100 per cent-of-salary shares award would push Hunt’s remuneration to €2.7 million, 5.4 times his pay level for 2024.
Looking ahead, AIB expects its net interest income to grow to €3.8 billion this year and other income to be greater than €750 million. Other income came to €756 million in 2025.
“Notwithstanding geopolitical uncertainty, our focus remains on completing the final year of our current strategic cycle and planning for the future with confidence, underpinned by the trust placed in us by our 3.4 million customers and their communities whilst delivering sustainable returns to our shareholders,” said Hunt.
Gross loans last year rose by 3 per cent, to meet management expectations, with a strong showing by the group’s international climate capital business in the fourth quarter helping to reach the target. Loan growth had been running at only 1.2 per cent over the first nine months of the year.
Chief financial officer Donal Galvin told analysts on a call that he was “more confident than ever” that AIB’s loan book would grow by a compound annual rate of 5 per cent over the next two years.
The bank’s return on tangible equity – a key measure of profitability relative to shareholders’ equity – would continue to exceed 20 per cent out to 2028. The ratio amounted to 25 per cent last year, well ahead of AIB’s 15 per cent official target.
AIB’s share of a growing market for new mortgage lending dipped to 30 per cent from 36 per cent for the previous year. Hunt said that the bank had a greater focus on lending directly to customers than through the broker network than peers. He added that the mortgage pipeline for 2026 “looks very good”.
Hunt also prompted questions from analyst when he said one of his medium-term goals is for AIB “is to be the best bank in Europe”.
“Ultimately, we won’t decide if we’re the best bank in Europe. It’ll be our stakeholders that do,” he said, adding that it will reflect a collection of views. These will include customers, shareholders, employees and regulators. He said the metrics on how this will be evaluated will be outlined in 12 months, when AIB releases its next three-year strategic update.
