Last week Bank of Ireland reported a €1.4 billion turnaround bouncing back from red to black. AIB this morning published results showing a €2.8 billion improvement on its bottom line reporting a full year pre-tax profit of €1.1 billion.
AIB's chief executive David Duffy says the bank's improved performance is not just about lower levels of arrears or write-backs, but it is more to do with the bank's underlying profitability and health and supported by the strengthening economy, noting the bank's €13 .5 billion of new lending approved last year. He said this 37% increase in lending is quite significant as an indicator of activity in the economy.
On the issue of restructured loans, Mr Duffy said that about 36,000 loan solutions are now in place with customers who had fallen behind in their mortgage repayments with an average stick rate of 90%. He said that while it is early days yet and the bank needs to see a longer cycle before it can be really confident, he is very encouraged by what he has seen so far.
AIB repossessed 345 homes last year, but the AIB CEO says that most of these were voluntary or abandonments. He predicts lower levels of repossessions because of AIB's approach to allow people keep their homes where ever possible. "Engagement is what really matters," Mr Duffy states. "At the end of the day we have taken 3,000 people out of being in mortgage arrears for more than a year and put them back into functioning in the economy," he adds. Repossession should not be viewed as an inevitable outcome if you engage with the bank, he says.
Mr Duffy says that negotiations with the Department of Finance on various issues are progressing well. He says the parties involved have to be very thoughtful and detailed in terms of looking at the capital, adding that the dialogue has been very constructive and positive.
Mr Duffy announced earlier this year that he was leaving the bank. He says that when he started at AIB he saw the job as being very complex and very specific. With a strong chairman and board and real momentum in the business, a profitable and well capitalised bank now starting to return, he said he felt the value he could add is largely completed and the job he was asked to do is done. He denies the pay cap at the bank was an issue for his leaving, adding that if it had been a cause of concern he would never have taken up the job in the first place. "I did know the pay cap was there, I understood it would remain - we are all realists," he stated.
MORNING BRIEFS - Microsoft will spend €134m building a new campus for its 1,200 staff at the South County Business Park in Dublin's Leopardstown. The technology company is marking its 30th year in Ireland this year.
*** The world's wealthiest investor, Warren Buffett, has accumulated $62 billion worth of deferred taxes at his Berkshire Hathaway investment vehicle. The billionaire, who has been a vocal proponent of higher tax rates for the wealthy, has taken advantage of US tax laws which allow corporation tax to be put off to facilitate capital investment.
*** Pre-tax profit at Arrabawn Co-Op doubled over the past year to €3.6m. The co-op, headquartered in Nenagh, is one of the country's largest. In a statement alongside the 2014 results, its chief executive Conor Ryan said a five-year investment programme in preparation for the lifting of milk production quotas was paying dividends. Arrabawn processed 310 million litres of milk last year up 8% on 2013. The average milk price for the year was 38.27 cents.
*** The euro hit a new 11-year low against the dollar overnight as investors waited for the European Central Bank to announce details of its bond-purchase programme. The single currency bought $1.1055 in Tokyo - its lowest level since September 2003. The ECB holds its monthly governing council meeting today in Cyprus. President Mario Draghi is set to unveil details of the bank's €1.1 trillion plan to buy up government bonds and other assets from banks in an effort to stimulate lending, boost growth and combat deflation across the euro zone.