AIB CEO SAYS SOME MORTGAGE WRITE-OFFS MAY BE CONSIDERED - AIB has reported a full year operating loss of €3.8 billion compared to a loss of €5.1 billion a year ago. The bank said its plan to to return to sustainable profitability during 2014 remains on target. AIB said that 17.7% of Irish buy-to-let mortgages are more than 90 days is in arrears, while 9.1% Irish owner-occupier mortgages are over 90 days in arrears.
AIB returned to the bond markets on two occasions last year, raising €1 billion in three year debt. There has been some talk of late of the Government selling its €1.6 billion contingent convertible in AIB in the coming weeks or months. AIB has said in the past that it hopes to attract private investors to take a stake in the near 100% state owned bank some time next year.
AIB's chief executive David Duffy says the bank's narrowing losses last year were mainly driven by a reduction in bad debt provisions from €8.2 billion in 2011 to €2.5 billion in 2012. Noting that over 9% of its residential mortgages are in arrears, Mr Duffy says the bank had already entered into a number of arrangements with its customers on restructuring their loans. "In the last quarter, we issued over 1,400 split mortgage offers to customers. We've done 1,700 other restructuring initiatives involving various categories, including mortgage to rent and term extensions. We also conducted 3,000 capitalisations where we capitalise interest and extend the term. We're seeing 2,500 cases a month ''curing'' because of customer and bank actions," Mr Duffy explains. He adds that the bank does not operate a model that gears itself towards repossessions in light of the new code for mortgage arrears. "Every individual would be restructured in a fashion that's customised to their situation. Where there is debt that is completely unsustainable then we would consider write-offs,' he says.
Mr Duffy would not confirm media reports of an increase in variable interest rates in the near future. The bank increased variable rates by 1% in the latter part of last year. "We have not made any announcements. We look at the bank's funding costs on a monthly basis and we keep an eye on all the pricing of our products every month and make a decision,'' he states. He also would not divulge the number of former executives at the bank who agreed to return a percentage of their remuneration upon request last year, but said it was more than two. "We were not forming a judgement of their participation but given the circumstances we suggested they'd consider whether they might make a contribution as a personal gesture,' he says.
MORNING BRIEFS - RGDATA, the representative body for local family shops, have called on the Minister for Finance to stop AIB from increasing transaction fees on business current accounts. RGDATA say the increase is as much as 165% and that from June transaction rates for lodging cash would increase from 17-25 cent per €100 to 45 cent per €100. The group says the move will cost jobs and will have an impact on prices and competitiveness. RGDATA has described the move as cynical and they have called on the Minister to intervene to stop such activity in a state controlled bank.
*** Financial services group IFG has reported operating profits of £6.2m sterling for 2012 amid challenging market conditions. Revenues for the year fell slightly to £76.2m from £77.3m. The group said the Irish financial services business had a strong year with new business and assets under management showing growth. It said it had stabilised and continued to reposition its other Irish businesses.
*** China's economic growth could be hampered in the years ahead by declining productivity and an ageing population according to a study from the US Federal Reserve. Trend growth could slow gradually to around 6.5% by 2030, or it could even slow to under 1% if forces undermining economic activity combine in a "worst-case scenario," the study warns. For the past decade, China's economy has been growing at around 10% per year - it has slowed off significantly since the global downturn hit. The study concludes that improving educational outcomes could offset some of the inevitable slowdown.
*** An advertising agency in India has fired a number of its employees after they produced a series of ads for a Ford car which Ford says it never ordered. One of the ads depicted former Italian Premier Silvio Berlusconi gagging and tying up a number of women in the boot of a Ford Figo. Another shows Paris Hilton doing something similar. The company apologised saying that the ads were never intended for publication and that Ford never ordered the ads.