AIB recorded a pre-tax profit of €762m for the first six months of the year, which the lender said is "consistent" with the same time last year.  In its half-year results issued this morning, the bank said it has reduced its exposure to non-performing loans by €2.7 billion (27%) to €7.5 billion since the beginning of 2018. 

The lender, which is still almost three-quarters owned by the taxpayer, said it is entering the final stages of the tracker mortgage examination and has issued payments to the "vast majority" of affected customers, adding the remainder will be completed by the end of September.

On the tracker front, AIB's chief executive Bernard Byrne said 96% of customers affected by the tracker mortgage issue have received payments from the bank. He added that in the next six weeks all impacted customers will have received payments. "I think you have to accept the fact that conduct issues will arise from time to time. Our job is to be ready and to deal with them. On the tracker issue specifically, even though we'll have finished, there is an appeals process and people also have the right - even outside of the appeals - to go to the Ombudsman, so the issue can run for quite a while even after the Central Bank determines it has to close," Mr Byrne said.

The AIB CEO said the issue could have the potential to run into next year. On tracker appeals by customers, Mr Byrne said: "We have agreed a position in respect of all of the cohorts and groupings and particular circumstances with the Central Bank at this stage, but that is not to say there aren't customers who feel they may have some entitlement to a tracker that we believe isn't the case or the documents don't support. The tracker is a product that some people obviously will find attractive, but anyone who's ever had a tracker has effectively been addressed and dealt with in this. What may exist are people who have never had a tracker who would say 'I would still like a product', so some of the appeals can relate to that," the AIB head added.

A Central Bank report this week found all of the major Irish-based lenders have "significant distances to travel" to become more customer-focused and bank executives are struggling to transition from the mindset of the banking crisis and continue to operate in "firefighting mode". AIB's immediate response to this report was to say there is room for improvement and the bank will be putting together an action plan to address its culture issues. 

Bernard Byrne said the Central Bank report creates a benchmark for the whole industry on standards. "We've been on this culture journey for a while now. We've been very focused on trying to make sure we're focused on the customer and everything builds out from that. We've invested quite heavily in staff, we've invested quite heavily in putting in place the appropriate tools at the front line to allow our staff to deal with customers.
And from a management point of view we've had a complete refresh to make sure we are focused on what the customer is about and we're focused on where the conduct agenda is," he said. Mr Byrne added the issue is making sure AIB continues to evolve its culture and that some progress has still been made but "we all have work to do".

AIB recorded a 32% share of the mortgage market in the first half of the year. Mr Byrne said the lender does not chase market share in the mortgage market, adding that "we don't think that's a sensible thing to do. "We've learned the lessons from the previous crisis. Our stock is 32% as well, so we're very comfortable with the levels we are at. Our strategy has been around standard variable pricing to reduce that. We've taken €190m of an annualised hit by bringing our standard variable rate pricing for our existing customers down. We think that's the right strategy because that allows customers to see the rate we have in the market to attract new customers is the rate we also give our back-book, so they don't have to do anything active."

On a potential future sale of the State's 71% share in AIB, the lender's CEO said the timing of any sale is an issue for the Minister for Finance. "Really it's an issue for the Minister and Government as to when they do that. Our job is to put the bank in a position where we deliver on our targets so that the investor base is ready to take up any of that share should he wish to sell," he added.

MORNING BRIEFS - Amazon has forecast strong autumn sales and posted a profit that was double Wall Street targets in the US last night largely thanks to the string performance of its cloud-computing business. The online retailer's shares rose more than 3% in after-hours trade on Wall Street last night.

*** This was in sharp contrast to Facebook's performance yesterday as the social media company suffered the biggest one-day wipeout in US stock market history a day after executives forecast years of lower profit margins. It seems Wall Street is concerned Facebook's business model could be under threat after a year dominated by efforts to head off concerns over privacy and its role in the global news flow. The company's shares closed down almost 19 percent at $176.26, wiping more than $120 billion off the company's value, or nearly four times the entire market capitalisation of Twitter.

*** Permanent TSB's Chief Risk Officer Stephen Groarke will leave the lender in the coming months to take up a senior finance position in the Irish operation of an international bank. Mr Groarke will also step down from the board of PTSB.