AIB Group on Thursday reported mixed results for Q1, with strong lending growth and solid credit quality offset by a 9% year-over-year decline in total income due to lower interest rates.
Net interest income (NII) fell to €950 million, down from €1.04 billion in Q1 2024, driven by lower interest rates.
The bank maintained its full-year NII guidance of over €3.6 billion. The net interest margin (NIM) was 2.86%, with the deposit beta at 18%.
Fee and commission income rose 7%, partially offsetting a 10% decline in other income. Operating costs increased 3%, and the cost-to-income ratio was 43%. The bank’s workforce decreased slightly to 10,423 employees.
Credit quality remained strong, with a modest impairment charge. AIB expects its cost of risk to range between 20 and 30 basis points for the year.
Gross loans grew by €200 million to €71.4 billion, with new lending of €3.2 billion, up 14% from last year. Green and transition lending accounted for €1.2 billion, or 38% of new loans.
In Ireland, mortgage lending rose 14% to €900 million, increasing the bank’s market share to 34%.
Personal and small business loan activities remained stable, with most applications completed digitally.
Customer deposits held steady at €109.9 billion. The CET1 ratio improved to 16.8%, from 15.1% in December. AIB also announced a €1.2 billion share buyback and €900 million cash dividend.
For 2025, AIB expects 5% loan growth, a 3% rise in costs, and a return on tangible equity (RoTE) above its 15% target. Regulatory levies are forecast at €140 million.
“Notwithstanding the uncertainty in the international external environment, we remain confident in our outlook for 2025 and beyond given our market-leading customer franchise, resilient revenues and strong funding and capital,” said chief executive Colin Hunt in a statement.
The bank’s 2026 targets remain unchanged, with a RoTE of 15%, a CET1 ratio above 14%, and a cost base under €2 billion.
