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Investing.com -- Shares of AIB Group Plc (IR:AIBG) traded higher on Tuesday after the Irish lender reported that its net interest income (NII) had stabilized in the third quarter, while maintaining strong capital and liquidity levels.
AIB said net interest income totaled €2.8 billion for the first nine months of 2025, down 10% year over year, in line with consensus forecasts for a full-year decline of 11% or €3.68 billion.
The bank’s net interest margin stood at 2.70% in the third quarter, compared with 2.78% in the first half of the year. Management noted that NII has “stabilised.”
The group’s fully loaded common equity tier 1 (CET1) ratio was 16.6% excluding year-to-date profits, an increase of 20 basis points from the prior quarter and around 160 basis points above its management target of more than 14%.
The ratio excludes a positive 250 basis-point effect from profits earned so far this year, which have not yet been added to regulatory capital, and a negative 70 basis-point impact related to the cancellation of IPO warrants.
It also includes 15 basis points of a total expected 35 basis-point benefit from the sale of AIB Merchant Services. The figure compares with a consensus forecast of 15.5% for the full year.
Fee income rose 2% year over year in the first nine months, while total operating income declined 10%. The report said the bank continues to expand its wealth management business.
AIB’s gross loan book increased 1% quarter over quarter to €72.2 billion, driven by €3.6 billion in new lending, including €1.2 billion in Irish mortgages.
Its share of new Irish mortgage flows was 29% in the third quarter, compared with 30% in the second quarter and 31% year to date.
The lender’s underlying operating expenses excluding levies rose 4% year over year, reflecting higher investment spending and inflationary effects, which were partly offset by lower staff numbers.
Its cost-to-income ratio stood at 44%, and full-time equivalent employees fell 0.2% quarter over quarter. Bank levies and regulatory fees were reported at €140 million, consistent with expectations.
Nonperforming exposures remained stable at €2.0 billion, with a nonperforming exposure ratio of 2.8%, unchanged from the previous quarter. AIB said it remains “vigilant” with careful management of its loan book.
Customer deposits increased 2% from the previous quarter to €114.3 billion, leading the bank to raise its full-year deposit growth forecast to about 4% from 3%.
The loan-to-deposit ratio was 63%, while the liquidity coverage ratio reached 205% and the net stable funding ratio stood at 164%.
AIB updated its full-year 2025 guidance, assuming a European Central Bank deposit rate of 2% by December and a deposit beta of 20%.
The bank now expects net interest income above €3.7 billion, compared with a previous forecast of more than €3.6 billion.
Other targets include loan growth of about 3%, €0.75 billion in other income, 3% growth in operating expenses excluding levies, and an exceptional gain of €150 million, revised up from €100 million.
The lender projected its cost of risk at the lower end of a 20-30 basis-point range, maintained a return on tangible equity above 20%, and reaffirmed its ordinary dividend payout ratio at the upper end of a 40-60% range.