Cuts to mortgage interest rates are being considered by AIB, the banks’s chairman Richard Pym has told shareholders at its AGM in Dublin today.
“Further rate reductions to AIB customers, existing and new, are something that the management team and board continue to consider,” he said.
High standard variable rates of about 4.5 per cent being charged by Irish banks at present have been criticised by consumer advocate groups at a time when ECB rates are at almost zero.
Mr Pym said the narrative that AIB was able to fund itself at the ECB base rate was “simply not the case”.
He added that AIB must ensure it is lending at “sustainable rates” to protect against future adverse shocks.
AIB did not update on financial performance and Mr Pym gave no comment on when a successor would be appointed to replace David Duffy as chief executive. Mr Duffy announced his resignation in January to become CEO of Clydesdale Bank in Glasgow.
He said AIB was in talks with the Government on options in relation to its €3.5 billion preference shares, including conversion into ordinary shares, the €1.6 billion in contingent capital notes, and its 523 ordinary shares in issue.
He reiterated that AIB expects to repay its €20.8 billion bailout funds in full “over time”. It intends to pay a dividend of €280 million in May on the State’s preference shares, a first such payment since they were issued in 2009.
Mr Pym also warned retail investors about buying shares in the bank in advance of its capital being reorganised. He noted that the are trading at six times its net asset value, well ahead of peers. “I cannot think why a reasonable investor would think that this bank is worth six times its net assets,” he said.
