AIB has reported an increase in their new mortgage lending market share in the early part of this year, raising the combined market share of the two leading banks to over 75%. Ahead of the annual meeting in Dublin, the bank announced on Thursday that the new mortgage market share had risen to 35.4% in the first quarter of the year. Last year alone, AIB had a market share which increased from 31% to 33%.
In contrast, Bank of Ireland announced earlier this week that it had a 40% market share for the first couple of months this year, a slight decrease from last year’s 41%. Despite this slight decline, the bank remained significantly ahead of its 2022 share of 28%, as domestic banks began reclaiming market share from non-bank lenders like ICS Mortgages and Finance Ireland. This recovery is tied to the latter’s funding issues, brought about by the increasing market interest rates.
In comparison to non-bank lenders, banks benefit from their mortgages predominantly being funded by customer deposits of low cost. In the past year, the market share of PTSB has been challenged, struggling to contend with larger rivals due to regulatory rules that require it to secure more costly capital for every new home loan it issues.
In 2024, AIB’s net interest income was reported to have increased by 27%. The bank notes that this was linked to the European Central Bank’s (ECB) series of rate increases over the past 15 months up until last September. Consequently, ECB’s deposit rate increased from -0.5% to 4%. AIB also revealed that it currently holds more than €33 billion in unused cash with the Central Bank of Ireland.
The bank maintains its previous projection of the full-year net interest income exceeding €3.65 billion, despite the slight decrease from last year’s €3.84 billion. This forecast assumes an ECB deposit rate cut of 1.25 percentage points, while currently, financial markets are only estimating a cut of approximately half that level.
“The firm delivered an exceptional performance in the first quarter, and we’re optimistic about our prospects for 2024 due to sustained progress in all areas of our business and the successful integration of our strategic objectives,” stated Colin Hunt, CEO of AIB. “AIB is maintaining a position of strength, backed by a solid balance sheet, a steady source of deposits and an expanding credit portfolio, which allows us to provide support to our clients and contribute to the broader economy.”
The bank saw its gross loans rise by €1 billion from December, reaching a total of €68 billion by the end of March, as the new lending of €2.8 billion surpassed the rate at which customers paid back loans.
During the quarter, AIB set aside a small charge anticipating potential loan losses, even though the non-performing loan ratio remained constant at 3% of its entire portfolio.