AIB Profit Surges on Lending Growth, Eyes Share Buyback

AIB, Ireland's leading banking group, has reported a significant surge in profits for 2024, driven by robust lending growth and a solid economic backdrop. The bank's net profit after tax rose to €2.35 billion, up from €2.06 billion in 2023, while operating profits increased by 3% to €2.8 billion. Total income was up 4% to €4.908 billion, with net interest income rising by 7% to €4.129 billion. This strong performance has positioned aib to consider a share buyback, further enhancing shareholder value and reducing the State's stake in the bank.



AIB's gross loans increased by 6% to €71.2 billion, primarily due to strong new lending and the completion of the onboarding of €0.8 billion of Ulster Bank tracker mortgages. The bank's total new lending increased by 17% to €14.5 billion, with positive trends across mortgages, renewable energy, and corporate lending. New mortgage lending in Ireland was up 14% to €4.5 billion, reflecting a mortgage market share of 36%. AIB also reported €5.1 billion in new green lending last year, representing 35% of its overall lending.

AIB's chief executive, Colin Hunt, attributed the bank's strong performance to its strategic focus on expanding its loan book and increasing its market share in mortgage lending. He noted that the bank has continued to expand its products and services, as well as its customer base, which reached a new high of 3.35 million. The State's shareholding in AIB currently stands at 12.39%, with a clear path to a return to full private ownership this year.



AIB's plans to buy back shares from the government will have several positive impacts on its capital structure, liquidity, and shareholder value. The buyback will reduce the State's stake in the bank, normalizing the share register and moving the bank closer to full private ownership. This will also increase the free float of AIB shares, making the bank more attractive to institutional investors and potentially leading to increased trading activity. The share buyback will enhance liquidity in AIB shares, as the bank will be purchasing a significant number of shares from the government. This transaction, along with previous buybacks, has returned around €18.5 billion to the State, with €4.4 billion returned since January 2024.

The share buyback will also increase the value of remaining shares, as the number of outstanding shares will decrease. AIB's board has proposed a dividend of 36.984 European cents a share, nearly 40% higher than last year, indicating increased shareholder value. The bank's strong financial performance, with net profit rising 14% to €2.35 billion and net interest income advancing 7% to €4.13 billion, supports the increase in shareholder value.

In conclusion, AIB's profit surge on lending growth and its plans to buy back shares from the government will have a positive impact on its capital structure, liquidity, and shareholder value. The bank's strategic focus on expanding its loan book and increasing its market share in mortgage lending has contributed to its recent profit growth, and its management of its structural hedge program has helped maintain its net interest income in a lower-rate environment. With a solid economic backdrop and a clear path to full private ownership, AIB is well-positioned to continue delivering sustainable returns for its shareholders.