As the Deputy will be aware, AIB’s financial statements are prepared in line with applicable international accounting standards and are independently audited. I would also note that I have no role in relation to the preparation or audit of the financial statements in any of the publicly quoted banks.
I have however received the following response from AIB:
" On transition to IFRS 9, there was no material change to provisions on impaired loans that were included in credit impaired loans (i.e. Stage 3) on 1 January 2018. As disclosed on Page 112 (Half Year Financial Report). AIB increased impairment provisions by €271m on transition to IFRS 9, and this was primarily driven by non-credit impaired loans (i.e. Stage 1 & 2).
Regarding press coverage on the sale of a loan portfolio, AIB notes:
- The IFRS 9 increase in provisions (Eur 271m) is due to the move to expected lifetime losses under IFRS 9, while the gain on disposal (Eur 140m) is related to the sale of a loan portfolio. These are two separate and unrelated events and AIB is very comfortable with the accounting treatment of these and all related matters.
- The impact of transition to IFRS 9 on the portfolio that was subsequently sold was de minimis. The gain was therefore not related to or as result of transition to IFRS 9.
- AIB’s capital position of 17.9% CET1 fully loaded at September 2018 fully reflects all impacts of the portfolio sale. AIB notes the positive outcome from the EBA stress tests and continuing strong capital generation."
The Deputy may also be aware of the research commentary from Goodbody Stockbrokers on 5 November 2018 which referred to the media article and stated:
"From what we can see the journalist completely mixes up IFRS 9 and the portfolio sale gain, which are two separate and non-related issues. The IFRS 9 increase in provisions is due to move to expected lifetime losses, whilst the gain on disposal was a separate matter and reflects consideration versus net carrying value (with c 40% coverage) and the capital benefit of lower RWAs. We note that AIB took the full IFRS 9 hit to capital on January 1, which saw its capital step down the €271m figure or 50pbs from 17.5% on December 31 to 17.0% on January 1, an outcome also reflected in the EBA stress test starting balance sheet and a treatment used by other banks on IFRS 9 introduction".
