Has there ever been a better time to be AIB chief executive?

There might be no sign of a return to executive bonuses but, otherwise, there are several reasons for AIB chief executive Colin Hunt to be cheerful.

In a trading statement issued last week, the Irish bank said it returned to profitability in the first quarter of this year after a bumpy ride in 2020 due to the impact of Covid-19 on the economy.

“We expect a strong recovery as the economy reopens and the rollout of vaccines gathers momentum,” Hunt said in the trading update.

Thanks to a range of Government supports, the predicted meltdown of the Irish economy has not yet materialised and most commentators are expecting a consumer splurge for six months or so whenever the economy is fully reopened and air travel can resume.

Less competition

The imminent exits of Ulster Bank and KBC from the Irish market will cut the number of banks from five to three, thereby reducing competition. AIB is in talks with Ulster Bank on acquiring €4 billion of performing corporate and commercial loans, and stands to gobble up market share. This will give it the leverage to nudge up fees and charges over time.

In addition, its main rival, Bank of Ireland, is taking significant flak over its decision to close bank branches around the State.

Davy sale

Hunt is also about to close on the €138 million purchase of his former employer, Goodbody stockbrokers. The timing of that deal could hardly be better given the current woes of its bitter rival, Davy, which is now up for sale. And AIB is in talks with Irish Life’s Canadian parent about a life and insurance joint venture.

AIB has also signalled a return to dividend payments, which were suspended last year due to Covid. “Capital remains materially above appropriate levels, setting AIB up for outsized returns in the coming years,” Davy analyst Diarmaid Sheridan stated in a note to clients on Friday.

Challenges lie ahead, of course, but oddly there might never have been a better time to be AIB chief executive. Except for the absence of bonuses.