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AIB has announced a 5% drop in pre-tax profits for 2018 but has indicated that it remains on track to meet its medium-term goals.
The lender, still 71% state-owned, said its pre-tax profits for the end of the year at the end of December amounted to 1.25 billion euros, compared with 1.31 billion euros in 2017.
New bank lending during the year increased 15% to € 12.1 billion, driven by growth in all segments and particularly strong performance in the corporate sector.
Mortgages increased by 16% during the year and the bank said it held a 32% market share in the mortgage market.
AIB announced today a 42% increase in its proposed dividend. The bank is expected to pay a dividend of 461 million euros, or 17 cents per share, for 2018.
This compared to a payment of 326 million euros a year ago, most of which will go back to the government. It has no longer sold AIB shares since the repurchase of a 29% stake in the largest initial public offering (IPO) of Europe in 2017.
AIB's ability to return excess capital to shareholders was an argument for selling the IPO. Today's results show that the fully loaded Tier 1 capital ratio of 17.5%, a measure of financial strength, far exceeds its medium-term target of 13%.
The bank was the first Irish lender to restore dividends after the sector required a major bailout from the bank almost a decade ago.
AIB also reported "significant progress" in reducing the level of its non-performing exposures (NPEs) as the level of outstanding bad debts increased from 16.1% in 2017 to 9.6%.
The bank said its NPEs fell by 41%, from 10.2 billion euros to 6.1 billion euros, and it was on track to reach a level of about 5%. here at the end of 2019.
Its net interest margin – the difference between the average rate at which it funds itself and lends to its customers – decreased from 2.5% to 2.47% in 2017.
Regarding Brexit, the bank said that the uncertainty that it has caused seems to have resulted in postponement of investment decisions, particularly among Irish and British SMEs.
The bank said its team of 26 Brexit advisers continued to work closely with its Irish and UK clients to better understand and advise on the potential implications of Brexit on their business.
Outgoing Chief Executive Bernard Byrne said the bank had a new year of strong operational and financial performance.
"Of all the key indicators on which we judge ourselves, the company has performed well over the year," Byrne said.
"The balance sheet quality continues to improve as we work on legacy nonperforming exposures.Our 2018 NIM, our net investment costs and costs are in line with our medium-term objectives and our underlying capital generation has helped us reach our goal of normalizing our proposed dividend payout level, "he added.
He also stated that the bank's basic principle was that Britain would leave the European Union in an orderly manner.
AIB said today that the regulatory process for the appointment of Colin Hunt as Managing Director of the bank is progressing well and that it should be finalized "shortly".
Donal Galvin, his deputy chief financial officer and group treasurer, has been appointed chief financial officer of the bank with immediate effect.
AIB's shares were weaker in Dublin trading this morning.
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