AIB has raised its full-year operating income forecast, partly down to expectations of interest rate increases over the next five months as central banks grapple with inflation stoked by the conflict in the Middle East.
The bank said on Thursday it expected its net interest income to exceed €3.8 billion this year, having previously estimated it would come in around that level to mark an improvement from last year’s €3.75 billion.
It sees the European Central Bank (ECB), which increased its key rates by a quarter of a percentage point in June, and the Bank of England raising rates once before the end of the year.
Other income is now projected to reach €800 million, up from a previous forecast of €750 million.
READ MORE
Other income increased 15 per cent in the first half of the year, driven by gains the sale of loans and investment securities disposals and equity investments, even as net fee and commission income decreased.
Net profit edged up to €939 million in the first half from €927 million a year earlier, driven by other income as net interest income dipped almost 4 per cent.
New lending rose 10 per cent to €7.5 billion, while gross loans increased by 3 per cent to €74.5 billion.
AIB set aside €91 million to cover potential bad loan losses, up slightly from an €85 million charge taken in the same period last year.
Chief executive Colin Hunt said the group’s strong first-half performance “reflected the resilience of the Irish economy” and the bank’s diversified business model, even as economists have lowered global growth forecasts this year amid heightened geopolitical uncertainty and resurging inflation.
“While elements of the external environment remain uncertain, our strong balance sheet and disciplined strategic execution position us well to support our customers, communities and the Irish economy for the second half of the year and beyond,” he said.
AIB said it was increasing its interim dividend by almost 60 per cent to 19.53 cents per share, or €406 million in total.
