AIB’s €400m non-performing loan sale cuts NPE ratio to 4.4%
AIB has sold a non-performing loan portfolio in long-term default to Everyday Finance, part of a consortium that includes Everyday, affiliates of Cerberus Capital Management and LCM Partners Limited.
AIB said the €400m loan sale cuts its non-performing loan ratio to 4.4%.
It added that it remains on track to reach its 3% target by the end of next year.
The lender said the portfolio includes multiple asset classes with an average time in default of about nine years.
It said its sale substantially resolves AIB’s 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,” it added.
As at December 2021, the loan portfolio had a gross NPE value of about €0.4 billion.
In the year ended 2021, the loan portfolio incurred a loss before tax and post-provisions of about €46m, the bank added.
AIB said that 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) after the sale.
Colin Hunt, AIB’s chief executive, said today’s sale is an important milestone for AIB as it reduces the NPE ratio to well below 5%, resulting in a proforma NPE ratio of about 4.4% in the first quarter of 2022.
“It demonstrates further progress as we move towards closing out legacy items this year while maintaining momentum in the delivery of our strategy,” Mr Hunt said.