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AIB proposes 30% rise in dividend despite drop in FY'17 profit

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AIB proposes 30% rise in dividend despite drop in FY'17 profit

Allied Irish Banks Plc proposed to increase its ordinary dividend for 2017 by 30% to €326 million, or 12 cents per ordinary share, despite a year-over-year drop in profit after tax from continuing operations attributable to owners of the parent to €1.11 billion from €1.36 billion.

EPS for full year 2017 with respect to continuing operations was 39.7 cents, down from 47.9 cents a year ago. Return on average ordinary shareholders' equity also dropped to 8.4% from 11.1% in 2016.

Net interest income increased on a yearly basis to €2.18 billion from €2.01 billion, while net fee and commission income ticked down over the same period to €391 million from €395 million. The bank's net interest margin stood at 2.58% in 2017, compared to 2.23% a year earlier.

Impairment and amortization of intangible assets widened to €83 million in 2017 from €70 million in 2016.

AIB said its stock of impaired loans dropped to €6.3 billion at the end of 2017 from €9.1 billion a year ago.

As of 2017-end, AIB's CRD IV common equity Tier 1 ratio was 20.8% on a transitional basis and 17.5% on a fully loaded basis, compared to 19.0% and 15.3%, respectively, at the end of 2016. The fully loaded leverage ratio rose to 10.3% at 2017-end from 9.2% a year ago, while the transitional leverage ratio also increased to 11.9% from 11.0%.

The 20.8% CET1 transitional ratio is "significantly in excess of the minimum capital requirement," the bank said, although it added that it intends to apply transitional arrangements for mitigating the impact of the introduction of IFRS 9 accounting standards on own funds, after which the figure will drop to 20.6%. The implementation of IFRS 9, including the impact on risk-weighted assets and regulatory deductions, will also reduce the fully loaded CET 1 ratio to 16.8% from 17.5% the bank noted.

The dividend, subject to shareholder approval at the April annual general meeting, will be payable May 4 to shareholders on the register at business close March 23.