Analysis: AIB chief maintains balancing act as results come

AIB chief executive Bernard Byrne is like a guy spinning plates. One represents the bank's day-to-day operation, another its legacy issues around loan arrears and tracker mortgage rates, another is for the switch to digital, another for Brexit, and one for its much-talked about stock market share offering.

It’s a tricky balancing act. Let one drop and the whole performance could unravel.

The publication of AIB’s half-year results was about reminding everyone that the recovery in its underlying trading performance is real and can be sustained.

The trading profit in the six months to the end of June was a healthy €560 million and the bank has built up surplus capital that might be used in the near future to pay a dividend to the State, which holds 99.9 per cent of its ordinary shares.

Tracker mortgage rates

It was also about apologising for past mistakes around the application of tracker mortgage rates, following an internal review of its books that was required by the Central Bank of Ireland as part of a wider industry examination. The bank has been coy about the number of customers affected but the €190 million provision suggests it’s quite a few.

It was also a reminder that not all of its post-crash problems have been resolved. Some 29,439 owner-occupier mortgage customers in the Republic were in a forbearance arrangements at the end of June, just 75 fewer than a year earlier.

They represented a stock of loans of just under €4 billion, which will take a long number of years to work through.

The results were also about reassuring various parties that Brexit is not a major threat to the business – about 10 per cent of its assets are in the UK.

Strategic review

Strangely, there was no mention of the strategic review of its various UK business, something that was only recently flagged to staff.

Then there’s the IPO, which was talked about for most of last year. These results were supposed to be a final validation of the bank’s recovery story before its glorious return to the main markets in the autumn as a proxy for the fastest growing economy in Europe.

Market volatility and Brexit put the kibosh on that plan and now the talk has switched to a flotation in 2017. It was left to Byrne yesterday to once again reiterate that the bank is ready to rock whenever the Government decides the market conditions are right.

Will they ever be right? Here’s hoping, given it still owes taxpayers about €17 billion.

Floating 25 per cent of AIB on the main markets in Dublin and London would make it one of the biggest issues of 2017, if it happens. It would also be a game-changer for AIB and for Byrne and make his current balancing act more manageable.