Morningstar DBRS Comments on Allied Irish Banks Plc Returning to Full Private Ownership

On 17 June 2025, the Irish Department of Finance announced the sale of the Irish State's remaining 2.06% stake in Allied Irish Banks Plc (AIB or the Bank) share capital. As a result, the Irish State is no longer a shareholder of the Bank, which returned to full private ownership with this action.

The Irish government bailed out AIB after the global financial crisis in 2010. The Irish government provided support for EUR 20.8 billion and recovered around EUR 19.8 billion to date after gradually selling down its 71% stake in the Bank since 2021. This amount can further increase after the repurchase of additional warrants issued to the Minister for Finance at the time of AIB's IPO in 2017.

We acknowledge the return to full private ownership as an important turning point for AIB, confirming the Bank's successful multi-year de-risking strategy, improved profitability and positive capital generation.

In Q1 25, AIB confirmed its 2025 guidance of a return-on-tangible equity above the 15% medium-term target notwithstanding an overall 9% decrease of total income year-on-year (YoY). The reduction of total income in Q1 25 was mostly driven by an 8% decrease of net interest income YoY due to lower interest rates but partially offset by higher lending activity. The Bank maintained a very strong market position in the Irish mortgage segment with a market share of 34% in new mortgage lending.

AIB's NPEs were EUR 2 billion at Q1 25, broadly stable compared to YE24. This led to an NPE ratio of 2.8%, in line with YE24. The Bank's capitalization remained robust, supported by a fully loaded CET1 ratio of 16.8% at Q1 25 (15.1% YE24) which reaffirmed AIB's large capital cushion over minimum regulatory requirements. AIB's CET1 ratio will likely benefit from a positive impact of 35 basis points from the sale of the Bank's 49.9% stake in AIB Merchant Services. The transaction is expected to be completed in 2025.

On 17 December 2024, Morningstar DBRS confirmed the credit rating on AIB, including the Bank's Long-Term Issuer Rating at A (low) and changed the trends on all long-term credit ratings to Positive from Stable.