AIB Group PLC and Bank of Ireland Group PLC on Friday highlighted their strong capital positions following the publication of the EU-wide bank stress tests by the European Banking Association.
The stress test involved 70 banks from 16 EU and EEA countries, covering 75% of the EU banking sector assets.
The EBA said European banks would remain resilient under an adverse scenario which combines a severe EU and global recession, increasing interest rates and higher credit spreads. But an adverse scenario that would see the 70 banks surveyed face combined losses of €496 billion would push three of the financial institutions below their minimum capital levels.
The EBA did not name the three banks that fell short.
AIB’s Chief Financial Officer Donal Galvin said: ‘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,’ he said.
Bank of Ireland Group PLC said its peak fully loaded CET1 depletion under the 2023 stress scenario is around 420 basis points compared to around 530 basis points in the 2021 exercise, an improvement of 110 basis points.
The bank noted the 420 basis point depletion is around 50 basis points better than the EU average compared to being around 50 basis points worse in 2021. This improved performance reflects actions the group has taken to enhance its business model and the improved resilience of the group’s capital to stress scenarios, it explained.
The group’s capital position is strong and continues to organically generate capital, it added.
Shares in AIB rose 4.8% to 358.50 pence in London on Friday, while Bank of Ireland Group closed 0.2% higher at €9.32.
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