AIB says it intends to repay €20.8 billion bailout from State

AIB chairman David Hodgkinson told shareholders today that the bank intends to repay the €20.8 billion in bailout funds that it has received from the State since 2009.

"This bank will over time repay the €20 billion to the State," he said in response to a rambling question from shareholder Niall Murphy at its annual general meeting in Ballsbridge. "That is our intention. We have to create a viable institution and we are well on that path."

Earlier, in a prepared statement, Mr Hodgkinson said it was the “constant focus” of the board of AIB to repay the State and he said the bank had paid €2 billion in recent years to the exchequer in fees related to the Government guarantees and coupon payents on its contingent capital notes.

Mr Hodgkinson also revealed that AIB chief executive David Duffy has agreed to a permanent contract with the bank, having previously been on a three-year contract that was due to end in December.

There was no financial update from AIB at its AGM this morning, given that it had issued an interim management statement in May and its results for the first half of this year will be published on July 30th.

Mr Hodgkinson said a number of milestones had been met by the bank recently, including approval for its restructuring plan by the European Commission. He reiterated that AIB had returned to post-provision profitability during the first quarter of this year.

Mr Hodgkinson said AIB plans to deliver mortgage approvals of between €7 billion and €10 billion each year out to 2017. Lending drawdowns by customers in its combined businesses were 60 per cent higher during the first three months of this year when compared with the same period of 2013.

He said mortgage drawdowns in the Republic were 50 per cent higher during the first three months of 2014 when compared to the same period last year.

The AIB chairman added that mortgage arrears in Q1 was “stable”.

“We are fully aware of the distress suffered by many customers in financial difficulty and we are making real and tangible inroads into restructuring their borrowings,” he said.

On SME lending, Mr Hodgkinson said credit demand is improving and lending approvals in the first quarter of 2014 were 25 per cent higher than the same period of last year.

The bank is to hold an extraordinary general meeting later to deal with a proposed capital reorganisation.

AIB currently has in excess of 523 billion shares in issue, 99.8 per cent of which are held by the State, and the bank plans to simplify this structure.