AIB:THE SLOWDOWN in the economy cannot be attributed to banks. Neither can banks alone provide the solution, the managing director of AIB, Donal Forde, told the committee.
He said AIB had not changed its mortgage-lending criteria. "We did not relax them through the boom years, and we have not tightened them over the last 12 months."
He added: "What has happened in the last 12 months is that the standing of borrowers has deteriorated. Their cash flows have become more uncertain, and the cost of servicing loans as interest rates rise is a greater problem for them. That combination of factors does undermine their strength and capacity as borrowers."
Despite the problems, he said AIB was providing the same level of mortgage approvals as it had done last year, but that between 12 and 15 per cent of such approvals were not being taken up. "It is not so much the absence of credit, but their confidence and commitment to making a purchase."
He said AIB had advanced 15 per cent more credit to its customers this year, and a similar rise went to small businesses. AIB had absorbed much of the extra cost of borrowing, and had been reluctant to pass it on to customers.