AIB Group PLC AIB Group - Sale of non-performing loan portfolio (5577P)
June 21 2022 - 2:00AM
UK Regulatory
TIDMAIBG
RNS Number : 5577P
AIB Group PLC
21 June 2022
21 June 2022
AIB Group plc - SALE oF NON-PERFORMING LOAN PORTFOLIO; NPE RATIO
BELOW 5%
AIB Group plc ("AIB") has agreed to sell a non-performing loan
portfolio in long-term default to Everyday Finance DAC
("Everyday"), as part of a consortium that includes Everyday,
affiliates of Cerberus Capital Management and LCM Partners Limited.
This is another important step in reducing our non-performing
exposures (NPE), resulting in a proforma NPE ratio of c. 4.4%* at
March 2022 and ensuring we remain firmly on track to reach our c.
3% target by end 2023.
The sale of this portfolio, which includes multiple asset
classes with an average time in default of c. 9 years,
substantially resolves our legacy, long-term default NPEs.
Normalising NPEs remains a priority delivering balance sheet
resilience with improved risk profile, lower calendar provisioning
and facilitates normalisation of our workout unit.
As at December 2021, the loan portfolio had a gross NPE value of
c. EUR0.4 billion and a fully loaded risk-weighted assets (RWA)
position of c. EUR0.3 billion. In the year ended 31 December 2021,
the loan portfolio incurred a loss before tax and post-provisions
of c. EUR46 million.
At completion, AIB will receive cash consideration of
approximately EUR0.4 billion. The proceeds will be used for general
corporate purposes, including the continuation of support for
customer restructuring. Overall the sale is expected to have a
positive c. 40bps impact on CET1 covering P&L, calendar
provisioning and RWA reduction.
Following the sale, all customers in the loan portfolio will
continue to have the same regulatory protections, including
protections under the Consumer Protection Code (CPC) and the Code
of Conduct on Mortgage Arrears (CCMA). The loans will be sold with
the benefit of existing protections under the customers' loan
contracts.
Colin Hunt, AIB Chief Executive Officer said "Agreement of this
transaction is an important milestone for AIB as it reduces the NPE
ratio to well below 5%, resulting in a proforma NPE ratio of c.
4.4%* at Q1 2022. It demonstrates further progress as we move
towards closing out legacy items this year while maintaining
momentum in the delivery of our strategy ."
Further information:
-- The buyer, Everyday Finance DAC, is a regulated entity and
will be responsible for all regulated activities in relation to the
portfolio.
-- Customers do not need to take any action following this
announcement and AIB will now contact impacted customers to inform
them that their loans are being transferred.
-- AIB has reduced NPEs from c. EUR31 billion in 2013 to
proforma c. EUR2.6 billion at end March 2022 following this
transaction. This has primarily been achieved through customer
engagement and case by case restructuring. AIB's strong preference
is to work with customers to implement sustainable solutions and
AIB continues to dedicate a considerable number of staff across the
country to support customers who are in financial difficulty.
* Q1 2022 NPE ratio was 5.1%, the Q1 proforma NPE ratio of c.
4.4% takes into account this portfolio sale. It does not include
the acquisitions of Ulster Bank's corporate and commercial loans
nor its performing tracker mortgage portfolio.
-ENDS-
Contact details:
Niamh Hore / Siobhain Walsh Paddy McDonnell / Graham Union
Investor Relations Media Relations
AIB Group AIB Group
Dublin Dublin
Tel: +353-86-3135647 / +353-87-3956864 Tel: +353-87-7390743 / +353-85-2088343
email: niamh.a.hore@aib.ie email: paddy.x.mcdonnell@aib.ie
siobhain.m.walsh@aib.ie graham.x.union@aib.ie
Forward Looking Statements
This document contains certain forward looking statements with
respect to the financial condition, results of operations and
business of AIB Group and certain of the plans and objectives of
the Group. These forward looking statements can be identified by
the fact that they do not relate only to historical or current
facts. Forward looking statements sometimes use words such as
'aim', 'anticipate', 'target', 'expect', 'estimate', 'intend',
'plan', 'goal', 'believe', 'may', 'could', 'will', 'seek',
'continue', 'should', 'assume', or other words of similar meaning.
Examples of forward looking statements include, among others,
statements regarding the Group's future financial position, capital
structure, Government shareholding in the Group, income growth,
loan losses, business strategy, projected costs, capital ratios,
estimates of capital expenditures, and plans and objectives for
future operations. Because such statements are inherently subject
to risks and uncertainties, actual results may differ materially
from those expressed or implied by such forward looking
information. By their nature, forward looking statements involve
risk and uncertainty because they relate to events and depend on
circumstances that will occur in the future. There are a number of
factors that could cause actual results and developments to differ
materially from those expressed or implied by these forward looking
statements. These are set out in the Principal risks on pages 28 to
30 in the 2021 Annual Financial Report. In addition to matters
relating to the Group's business, future performance will be
impacted by direct and indirect impacts of the COVID-19 pandemic
and by Irish, UK and wider European and global economic and
financial market considerations. Any forward looking statements
made by or on behalf of the Group speak only as of the date they
are made. The Group cautions that the list of important factors on
pages 28 to 30 of the 2021 Annual Financial Report is not
exhaustive. Investors and others should carefully consider the
foregoing factors and other uncertainties and events when making an
investment decision based on any forward looking statement.
Figures presented may be subject to rounding.
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