AIB bosses have today rejected suggestions that the bank was being protected from enhanced competition in the market by the Central Bank.
Both the bank's chairman Richard Pym and its CEO Bernard Byrne were responding to claims by the mortgage rate campaigner Brendan Burgess at the bank's AGM today.
Mr Burgess said the Central Bank was preventing competitors from entering the market here. That was resulting in higher mortgage interest rates here than elsewhere.
He compared AIB's three year fixed rate here to that offered by the bank's Northern division, First Trust, where the rate was almost 1.5% lower. First Trust's deposit rate was also more than 1% higher, he added.
AIB chairman Richard Pym told the bank's AGM that the lender had reduced variable rates on four occasions in the past year.
He also said the bank had tough regulatory discussions with the Central Bank and said they were certainly not being protected by it. Banks could compete here if they chose to, he added.
Bernard Byrne said total profitability on mortgages at AIB was almost identical to the European average because of the high exposure to tracker rate mortgages here.
He said he believed AIB's actions were stimulating competition in the marketplace.
Meanwhile, Mr Byrne also said the low level of housing completions at the moment is a challenge for the bank.
Bernard Byrne said a normalisation of the market is important as the slow growth in mortgage lending right now is placing a restraint on the bank's balance sheet.
Addressing the AGM, Mr Byrne said the bank's mortgage lending last year amounted to around €5 billion where a normally functioning market would require volumes of the order of €8-10 billion in a year.
Mr Byrne also said that the bank still had a significant volume of loan arrears to work through, despite good progress in recent years. He said AIB had offered 40,000 solutions to customers in arrears.
Shareholders at the AGM also heard the bank's chairman say that the bank's non-performing loans have been comprehensively reviewed and that the board is satisfied that they are accurate.
Richard Pym noted recent media commentary around the bank's non-performing loans.
He was referring to reports by RTÉ last month of allegations by an AIB whistleblower who claimed the bank misled regulators in dealing with loans in arrears.
The individual said AIB tried to make progress on restructuring look better than it was in reality.
In an earlier trading statement ahead of the AGM today, AIB said it has maintained strong profitability in the first quarter of 2016, following on from a trend set last year.
AIB said its net interest margin - which shows how profitable its lending is - rose to 2.09% in the first three months of 2016 from 2.02% in the last quarter of 2015.
The bank also said its new lending drawdowns had risen by 17%.
AIB said the level of impaired loans had been reduced by €1 billion since December 2015 and now stood at €12 billion.
The bank also made a credit write-back of €109m in the three months to the end of March on the back of ongoing customer restructuring activity, improvements in trading performance and rising house values.
But it added that as previously indicated, it is expected that the level of provision writebacks will be lower this year than last year.
It said that growth in the mortgage market would be hampered by "market constraints" this year, without giving details.
AIB said it would repay €1.8 billion to the State in July as a result of the maturity of the Contingent Capital Notes, which it said would further improve its net interest margin.
Banks have come under renewed government pressure to cut their mortgage rates after a proposed law to hand the Central Bank the power to intervene in the market passed the initial legislative stage in the Dáil despite objections from the Government and Central Bank.
Finance Minister Michael Noonan said last week that he hoped 99% state-owned AIB would follow the rate cut it just announced with another "fairly soon".
In today's trading update, AIB's chief executive Bernard Byrne said the first quarter continued the trend from last year with strong profitability, increased lending and reductions in impaired loans.
"Our focus on growth, a more efficient operating model and improved funding costs enabled us to pass on a fourth reduction of 25 basis points to variable rate mortgage customers and a €2,000 contribution to switching costs," he added.
Mr Noonan also said it will be the first half of next year, and not later this year as previously hoped, before an opportunity arises to sell a stake in AIB.
