AIB Group - Sale of €1.1bn of NPLs looks to be capital and earnings accretive

Davy Research
/Read Important Disclosures

The agreement to sell €1.1bn of non-performing loans (NPLs) reduces AIB’s pro-forma Q1 2018 NPL ratio to 12.7% of gross loans, down from 16% as of end-2017. This momentum underpins our confidence in AIB’s NPL reduction strategy. Furthermore, a cash price of €0.8bn compares favourably with overall provisions coverage and suggests that the sale is both capital and earnings accretive. Despite concerns that public opposition to NPL sales and added regulation would deter buyers, AIB’s sale is further evidence that the NPL buyer market remains supportive.