Fianna Fáil Spokesperson for Finance Michael McGrath has welcomed today’s trading update from AIB which indicates the State-owned bank was strongly profitable in the first quarter of the year as it implements an ongoing series of reductions in its variable mortgage rate.
Deputy McGrath commented, “It’s noteworthy that AIB, which has reduced its standard variable rate on four occasions in the past eighteen months, has still managed to increase its net interest margin by twelve basis points to 2.09% in the quarter to the end of March. This is further evidence that the refusal of some other banks to reduce their standard variable rate is completely unjustifiable by current market conditions and can only be described as naked profiteering.
“Today’s positive update from AIB further boosts the possibility of a further variable rate cut in the coming months. It would be a hugely positive development if the other main players in the domestic mortgage market were to follow AIB’s lead in this regard.
“I’ve always acknowledged the needs for banks to be profitable and it is a key objective for the State to recoup the enormous amount of funds used to rescue AIB. It’s possible to match this objective with the charging of competitive mortgage rates which move in line with the bank’s cost of funds.
“I also welcome the improvement in the mortgage arrears situation at AIB. Where resolutions have been put in place, they need to be carefully monitored to ensure they are genuinely long term and sustainable. The prospect of a further repayment by AIB to the State of €1.8 billion in capital in July of this year is also a positive sign.
“The State’s holding in AIB is owned through the Ireland Strategic Investment Fund. There is a strong case for using part of the proceeds of the ongoing disposal of the investment in AIB to address the critical infrastructure deficit in the State, consistent with the need for a commercial return,” said Deputy McGrath.