AIB significantly increased returns to shareholders following a substantial rise in full-year profit, primarily through a buyback of government-owned shares, aiming to reduce the state's stake to approximately 5%.
The bank's after-tax profit for the full year grew by 14% to 2.35 billion euros. A total of 2.6 billion euros will be distributed to shareholders through dividends and share buybacks compared to 1.7 billion euros in 2023, constituting a payout ratio of 109%.
The remarkable profit surge exceeded company expectations by 11%. AIB's shares surged by 6.7% in early trading.
Ireland's finance minister indicated a potential exit from the bank, which the state took over in 2010. AIB's finance chief, Donal Galvin, mentioned that the new 1.2 billion euro share buyback is expected to reduce the state's share from 12.4%.
The bank's profit growth was propelled by a 7% rise in net interest income (NII) to 4.1 billion euros, surpassing the projected 4 billion euros. Total new lending increased by 17% due to positive activity in mortgages, renewable energy, and corporate sectors.
AIB's return on tangible equity (ROTE) rose to 26.7% from 25.7% in 2023.
The bank, a major player in Ireland alongside Bank of Ireland, reported a strong start to 2025 and anticipated a 5% loan growth with NII exceeding 3.6 billion euros due to an anticipated decrease in interest rates.
Analysts at Davy Stockbrokers stated this indicates a 2% outperformance against analysts' 2025 consensus forecasts for underlying profit before tax.
Galvin noted that although Ireland's rapidly growing economy could be impacted by external risks leading to a European slowdown, he did not foresee this affecting the momentum in the Irish mortgage market significantly.
He mentioned that AIB's exposure to foreign direct investment-type companies is minimal, emphasizing Ireland's favorable position in terms of growth and the government's fiscal stability relative to other European nations.