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AIB Group PLC on Tuesday lifted its annual guidance after a ‘strong’ third quarter, despite rate cuts hitting net interest income. The Dublin-based lender now expects 2025 net interest income of above €3.7 billion, its outlook raised from above €3.6 billion. Net interest income in 2024 totalled €4.13 billion. In the nine months to September 30, net interest income declined 10% on-year to €2.80 billion, ‘primarily as a result of lower interest rates partially offset by higher average loan and customer account volumes’. The European Central Bank has cut rates four times this year, by a total of 1.00%, taking the deposit rate to 2.00%. It left rates unmoved in July, September and October. AIB’s outlook now assumes an ECB deposit rate of 2.00%, its half-year view had sized up a 1.75% rate. The outlook still assumes a 3.75% Bank of England base rate. Bank rate currently stands at 4.00%, with a BoE decision due on Thursday. AIB’s view on the UK rate outlook is unchanged from its half-year forecast. AIB said: ‘At a global level uncertainty remains high albeit tempered in recent months. The Irish economy continues to perform well with a growing population and strong employment supporting economic growth. As we look towards the end of the year we remain confident in the resilience of our business given our robust balance sheet, strong profitability and our ability to generate sustainable shareholder returns.’ AIB said net interest income has ‘remained resilient throughout the interest rate cycle and has stabilised’. Total new lending in the nine months to September rose 5% to €10.5 billion, AIB said. ‘New mortgage lending in Ireland was broadly stable at €3.1 billion and reflected a market share of 31%. Personal lending in Ireland was up 4% to €1.1 billion reflecting our larger customer base and our market-leading digital proposition. New lending to SMEs in Ireland of €1.1 billion was marginally lower than the prior year period,’ the firm added. AIB now expects to book a €150 million exceptional gain for 2025, largely stemming from the sale of a minority stake in AIB Merchant Services to joint venture partner Fiserv Inc. It had previously forecast an exceptional gain of €100 million. AIB shares rose 1.4% to 715.11 pence each in London on Tuesday morning. In Dublin, they were up 1.9% at €8.17. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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