AIB has today lifted its full year income guidance for the third time this year after a higher interest rate environment contributed to a "very strong" third quarter that it expects to continue in the final three months.
In a trading update for the third quarter, AIB said its total income in the first nine months of the year increased by 70%, with net interest income (NII) up 95% year-on-year.
The bank, which had a 32% share of the Irish mortgage market at the end of September, now expects NII of more than €3.75 billion this year, raising a July forecast of €3.6 billion and an initial estimate of €3 billion in March.
It also increased its net interest margin (NIM) forecast to above 3% from 2.70% and expects return on tangible equity (ROTE) in excess of 20% this year, well above its medium-term target of above 13%.
The bank had forecast ROTE of around 20% in July.
AIB's NIM - a key metric that shows how profitable its lending is - stood at 3.08% at the end of September, while its fully loaded core tier 1 capital ratio - a measure of financial strength - rose to 16.2% from 15.7% three months earlier.
Analysts at Davy Stockbrokers said the consensus forecast for 2024 net interest income of €3.6 billion appears on the conservative side, based today's trading update.
AIB's main rival Bank of Ireland last week lifted its guidance for the second time this year.
Irish bank have benefited from higher interest rates and the decisions by Ulster Bank and KBC Bank Ireland to shut their Irish businesses and sell their loan books to the banks that continue to serve the market.
In today's trading update for the three months from July to September, AIB said its gross loans rose by €5.6 billion to €66.8 billion driven by its deal for the Ulster Bank loan book.
AIB reported new lending of €8.5 billion in the third quarter, with green lending making up about 20% of that figure at €1.7 billion.
The bank said it has a mortgage market share of 32.1%.
Meanwhile its customer accounts rose by €2 billion to €104.4 billion, up from €102.4 billion at the end of December.
AIB said that in the nine months to September its Net Interest Income increased by 95% compared to the same time last year.
It said this reflected higher loan volumes, increased interest rates and the slower than anticipated pace of deposit migration and associated interest expense, which it said it expects to evolve.
As a result of the increase in the bank levy after the Budget last month, AIB said it was estimating an annual charge for 2024 of about €100m. It said this compares to an estimated €40m charge in 2023 and up from a charge of €37m in 2022.
Regulatory costs and bank levies are expected to be about €165m in 2023, it added.
Colin Hunt, AIB's chief executive, said the bank had a very strong third quarter performance continuing the
momentum from the first half and it expects that to continue in the final quarter.
"Notwithstanding geopolitical uncertainty, AIB remains in a position of strength, delivering on our strategy and supporting our 3.2 million customers as well as the wider economy," Mr Hunt said.
"2023 is set to be a record year for the group and we expect to deliver RoTE (Return on Tangible Equity)in excess of 20%," he said.
"As we conclude the successful delivery of our three year strategy, we are now preparing for the next phase of the Group's development and remain committed to the creation of value for all our stakeholders and delivery of sustainable returns," he added.
Shares in the bank moved higher in Dublin trade today.
