TIDMAIBG
RNS Number : 6301H
AIB Group PLC
28 July 2023
28 July 2023
AIB Group plc - European Banking Authority (EBA) European-wide
stress test 2023
AIB notes the announcements made today by the EBA on the EU-wide
stress test.
CFO comment on EBA EU-wide stress test
"Our result of 9.95% fully loaded CET1 in the EBA's hypothetical
adverse scenario demonstrates our high capital base and capital
resilience in the face of one of the most severe EBA adverse
scenarios to date. Capital depletion of 6.3% marks an improvement
on the 2021 exercise, despite this test being more severe. AIB
continues to be very well-capitalised with a CET1 ratio of 15.7% at
H1 2023 which remains substantially in excess of regulatory
requirements."
-Donal Galvin, CFO
Results of EBA EU-wide stress test
AIB Group plc ("AIB") was subject to the 2023 EU -- wide stress
test conducted by the European Banking Authority (EBA), in
cooperation with the Central Bank of Ireland (CBI), the European
Central Bank (ECB), the European Commission (EC) and the European
Systemic Risk Board (ESRB).
AIB's capital ratios and EBA stress test results are outlined
below:
AIB CET 1 capital ratios Dec 2022
CET 1 - Transitional 17.90%
CET 1 - Fully loaded 16.27%
---------------------
EBA 2023 stress test results Dec 2025
(Adverse scenario)
---------------------
CET 1(1) 9.95%
---------------------
The 2023 EU-wide stress test does not contain a pass-fail
threshold and instead is designed to assist competent authorities
in assessing AIB's ability to meet applicable prudential
requirements under stressed scenarios.
The adverse stress test scenario was set by the ECB/ESRB and
covers a three-year time horizon (2023-2025).
The stress test was carried out applying a static balance sheet
assumption as of December 2022, and therefore does not take into
account future business strategies and management actions. It is
not a forecast of AIB's profits.
No capital action is envisaged for AIB as a result of the EBA
stress test results.
The 2023 EBA stress test adverse scenario resulted in capital
depletion of 6.3% on a fully loaded basis and is lower than the
2021 EBA stress test adverse scenario (capital depletion 6.8%),
reflecting the improved risk profile of the Group. CET1 in the
adverse scenario of 9.95% is well above the total SREP capital
requirement (TSCR) of 6.05%(2) .
AIB Group plc published its half-yearly financial results this
morning, further information is available on our website.
-ENDS-
Further information:
-- The severe nature of the adverse scenario reflects the EBA's
deliberate choice and purpose of the stress test exercise, which is
to assess the resilience of the European banking system to a
hypothetical severely deteriorated macro-environment
-- The EBA's 2023 adverse scenario is the most severe to date in
terms of GDP decline. The scenario also includes a significant
shock to Irish unemployment which is assumed to increase from a low
starting position of 4.7% at Dec 2022 to a peak of 12.4%. For
further scenario information, please refer to the EBA website
here
-- Due to the methodology, net interest income (NII) was capped
at 2022 levels such that the increasing interest rate environment
was not incorporated into the assessment.
-- AIB's stress test results are heavily influenced by past
experience and historical credit losses; they do not fully capture
the significant improvements in risk management and credit
underwriting since the global financial crisis (GFC)
To view the results including disclosure templates published by
EBA for AIB please
http://www.rns-pdf.londonstockexchange.com/rns/6301H_1-2023-7-28.pdf
[1] Note that both the transitional and fully loaded CET1 ratios
are the same by the end of the stress test period as all
transitional adjustments are fully phased out.
(2) TSCR is the sum of Pillar 1 (4.5%) and Pillar 2 requirement
(1.55%) and excludes combined buffer requirements
For further information, please contact :
Niamh Hore / Siobhain Walsh Kathleen Barrington/Paddy McDonnell
Investor Relations Media Relations
AIB Group AIB Group
Dublin Dublin
Tel: +353-86-3135647 / +353-87-3956864 Tel: +353-87-408-8323 / +353-87-7390743
email: niamh.a.hore@aib.ie email: kathleen.m.barrington@aib.ie
siobhain.m.walsh@aib.ie ...........paddy.x.mcdonnell@aib.ie
Forward Looking Statements
This document contains certain forward looking statements with
respect to the financial condition, results of operations and
business of AIB Group and certain of the plans and objectives of
the Group. These forward looking statements can be identified by
the fact that they do not relate only to historical or current
facts. Forward looking statements sometimes use words such as
'aim', 'anticipate', 'target', 'expect', 'estimate', 'intend',
'plan', 'goal', 'believe', 'may', 'could', 'will', 'seek',
'continue', 'should', 'assume', or other words of similar meaning.
Examples of forward looking statements include, among others,
statements regarding the Group's future financial position, capital
structure, Government shareholding in the Group, income growth,
loan losses, business strategy, projected costs, capital ratios,
estimates of capital expenditures, and plans and objectives for
future operations. Because such statements are inherently subject
to risks and uncertainties, actual results may differ materially
from those expressed or implied by such forward looking
information. By their nature, forward looking statements involve
risk and uncertainty because they relate to events and depend on
circumstances that will occur in the future. There are a number of
factors that could cause actual results and developments to differ
materially from those expressed or implied by these forward looking
statements. These are set out in the Principal risks on pages 23 to
25 in the Annual Financial Report 2022 and updated on page 33 of
the Half-Yearly Financial Report 2023. In addition to matters
relating to the Group's business, future performance will be
impacted by the Group's ability along with governments and other
stakeholders to measure, manage and mitigate the impacts of climate
change effectively, the impact of higher inflation on customer
sentiment and by Irish, UK and wider European and global economic
and financial market considerations. Future performance will
further be impacted by the direct and indirect consequences of the
Russia-Ukraine war on European and global macroeconomic conditions
and any enduring effects of the COVID-19 pandemic. Any forward
looking statements made by or on behalf of the Group speak only as
of the date they are made. The Group cautions that the list of
important factors on pages 23 to 25 of the Annual Financial Report
2022 is not exhaustive. Investors and others should carefully
consider the foregoing factors and other uncertainties and events
when making an investment decision based on any forward looking
statement.
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END
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