AIB’s Colin Hunt says further interest rate rises are coming

Mr Hunt did not reveal if and when AIB depositors might benefit from the rate hikes, saying only that it was “an area of active consideration at the moment”.

“The bulk of the rate adjustment on foot of the increase in inflation pressures is, I think, behind us, but I suspect we are going to see another number of rate increases between now and the end of the year,” he told reporters after the bank’s annual general meeting in Dublin on Thursday.

He said rates were likely to stay higher “for some time”.

His comments come on foot of bullish first-quarter results, which revealed a 70pc boost in total income compared to the first three months of last year.

Net interest income was 93pc ahead of the first quarter last year and up 16pc compared to December, giving the bank a net interest margin of 2.78pc, 0.60 points up on the end of 2022.

The group now expects net interest income of more than €3.3bn for the year, thanks to ECB hikes.

But Mr Hunt and the AIB board faced some pushback from small shareholders at its AGM on Monday over its policy on deposit rates.

AIB’s deposit rates range from 0.1pc for student savers to 1pc for regular savers, with fixed term deposits at 0.5pc for business and personal customers.

Mr Hunt said the bank was first out of the traps to set higher deposit rates when the European Central Bank first began hiking last July.

“We are alert to pricing, right the way across the product range, and in the event that we believe it necessary to move our pricing again, we will do so,” he said. “It’s an area we are keeping under constant review.”

The exit of Ulster Bank from the Irish market - as well as switchers from KBC, which has also left the country - has had a “significant” impact on AIB’s bottom line, Mr Hunt said.

He said an estimated 48pc of the customers leaving the two exiting banks are banking with AIB.

“We have materially benefitted, in terms of the size of the loan book, also in terms of our overall customer franchise, and the bank now has more customers here in Ireland than it has had at any point in its history.”

Customer numbers were up 450,000 last year, with the bank now serving a total of 3.2 million customer accounts.

It expects to grow customer loans by more than 8pc in 2023, after a 5pc rise on new lending in the first quarter.

New mortgage lending in Ireland was up 7pc to €0.9bn in the quarter, resulting in AIB taking a market share of 31pc.

Personal lending was up 24pc, but SME credit demand in Ireland “remains subdued” the bank said in a trading update ahead of its AGM.

Despite jitters in global banking markets following the implosion of a third US regional lender, Mr Hunt said he was “not seeing” any signs of stress in the Irish sector given low debt levels and high savings rates, and pointed to an upbeat domestic economic picture.

“The overall level of indebtedness in the Irish economy, is, in real terms, about half of what it was during the global financial crisis. And that relatively low level of indebtedness, I think, is one of the reasons that we’re not seeing levels of distress in the [loan] book at this stage, but we remain alert to it.”

He said the bank is “open for business” should customers want to transfer their loans from one of the vulture funds, but said the lender had not been approached by the Central Bank to change its lending policy.

"I would encourage borrowers who are looking to transfer mortgages to AIB to come and talk to us and we will evaluate such applications on the very same basis as we evaluate all customers coming in for our mortgage facilities."