AIB reveals current accounts of UK customers grew by £1 billion in 2020

AIB reported a pre-tax loss of £97m for its UK operation, which includes its 15 branches in the north.

THE current accounts belonging to AIB's customers in Northern Ireland and Britain swelled by £1 billion during the Covid-19 pandemic, but the lender's UK operation ended 2020 with a pre-tax loss of £97m.

AIB's annual report yesterday disclosed an after tax loss of €741 million (£641m) across the entire group for the 2020 calendar year, but group chief executive Colin Hunt said the lender expects to return to profit in 2021.

In what has become standard practice for lenders during the Covid-19 pandemic, AIB's reported loss is linked to a massive impairment charge placed on its books in anticipation of problems with loan repayments during the current crisis.

In AIB's case, that expected credit loss is €1.46 billion (£1.26bn). But the lender said it expects to return to profit and resume normal dividends this year.

The annual results released by AIB on Friday gave little away on its Northern Ireland operation, which includes 15 branches.

But the balance sheets it did reveal that new lending was up in the north in 2020, rising 29 per cent from £300m to £400m.

That was in stark contrast with its GB business, where new lending fell 36 per cent from £1.8bn to £1.1bn.

AIB's operation in Britain is limited to business banking across 13 locations, while its Northern Ireland activities mixes both retail and business banking.

AIB began restructuring its GB business during 2020, which included an exit from the SME market.

Total loans to Northern Ireland customers appeared to fall in 2020, dropping four per cent from £2.2bn to £2.1bn.

The bank earned around £21.5m in fees from its retail customers in the north.

Yesterday's annual report did appear to show more evidence of the Covid-19 pandemic's impact on consumer confidence, with current accounts belonging to AIB UK customers surging by 18 per cent in 2020.

In total, AIB UK reported that current accounts grew from £5.8bn in 2019 to £6.8bn in 2020. Deposits remained level at £3bn.

However total operating income for the UK operation fell 21 per cent to £234m.

After operating expenses and a £184m impairment charge, AIB UK finished 2020 with a loss before tax of £97m.

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