REG - AIB Group PLC - AIB Group - Sale of non-performing loan portfolio

AIBAnnouncement

21/06/2022 07:00

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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. €0.4
billion and a fully loaded risk-weighted assets (RWA) position of c. €0.3
billion. In the year ended 31 December 2021, the loan portfolio incurred a
loss before tax and post-provisions of c. €46 million.

 

At completion, AIB will receive cash consideration of approximately €0.4
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. €31 billion in 2013 to proforma c.
€2.6 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 (mailto:niamh.a.hore@aib.ie)                         email: paddy.x.mcdonnell@aib.ie

            siobhain.m.walsh@aib.ie (mailto: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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