AIB Group PLC on Tuesday hailed a ‘very strong financial performance’ so far in 2024, helped by robust interest rates and average loan volumes.

AIB shares were 3.5% higher at €450.00 each in London on Tuesday morning, and 4.4% higher at €5.37 each in Dublin.

The lender said net interest income in the nine months to September was 12% higher on-year. Its net interest margin to September was 3.22%, better than the 3.08% it reported this time last year.

‘I am pleased to announce that the group had a very strong third quarter performance, continuing the momentum from the first half. Income generation was robust, gross loans grew to €70.4bn and new lending to September increased by 17% to €10 billion, of which 35% was green lending. Demonstrating our ability to generate and return capital, we completed a €500 million directed share buyback with the minister for finance in the third quarter, bringing payments to the state to €17 billion including €3.1 billion this year,’ Chief Executive Officer Colin Hunt.

In September, the Dublin-based parent of Allied Irish Banks said it bought back €500 million in shares from the Irish government. The state’s holding stands at around 21%.

In June of last year, the state’s stake fell below 50% for the first time since the bank was bailed out in 2009 in the wake of the financial crisis.

The Irish government stepped in to buy a stake in AIB in 2009 amid the global financial crisis. The state pumped a total of €29.4 billion into AIB, Bank of Ireland Group PLC, and Permanent TSB Group Holdings PLC over 2009 to 2011.

AIB affirmed that it expects 2024 net interest income of around €4.0 billion, a rise from the €3.84 billion reported in 2023. The outlook assumes a European Central Bank deposit rate of 3% in December. The ECB deposit rate currently stands at 3.25%, after back-to-back cuts of 25 basis points in September and October.

Another cut of the same size next month would mean its deposit rate stands at 3% at year-end.

AIB upgraded its loan book growth outlook to the 5% to 6%, from 4% previously.

CEO Hunt said: ‘We remain confident in our outlook for the remainder of 2024 and beyond given our 3.3 million customer base, competitive market positioning, growing loan book and resilient and diversifying income. The Irish economy continues to perform well and AIB plays a key role in its success by supporting our customers and their communities.’

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