AIB posts 11% rise in new lending, sees little impact from Middle East conflict

Key facts

• New lending rose 11% to €3.6 billion in Q1 2026.
• Gross loans increased 1.7% to €73.5 billion from Q4 2025.
• Mortgage market share stood at 30% at end of March.
• Green and transition lending of €1.5 billion made up 42% of new lending.
• Net interest income fell 3% to €920 million due to lower rates.
• Operating costs rose 2% in line with guidance; cost-income ratio 44%.
• Customer deposits unchanged at €117 billion since December.
• AIB expects full-year net interest income to rise to €3.8 billion.

Strong lending growth despite geopolitical headwinds

an 11% year-on-year increase in new lending for the first quarter of 2026, reaching €3.6 billion, as the bank retained its full-year guidance. The results suggest that Irish consumers and businesses have so far shrugged off the impact of the ongoing Middle East conflict, which has pushed up fuel prices globally. Total gross loans on the bank’s balance sheet grew by 1.7% to €73.5 billion from the fourth quarter of 2025. The bank’s mortgage market share stood at 30% by the end of March. Customer deposits remained unchanged at €117 billion since the end of December, indicating stable savings behavior.

Green lending drives 42% of new loans

Green and transition lending of €1.5 billion accounted for 42% of new lending during the quarter. Since 2019, AIB has deployed €24.4 billion in such lending. Green mortgages represented 61% of new mortgage lending, underscoring the bank’s focus on sustainability. Chief executive Colin Hunt said the bank entered 2026 with great momentum and delivered a strong first-quarter performance. He highlighted a “very, very strong pipeline” spanning mortgages, business loans, and credit for large-scale renewable energy and infrastructure projects in both Europe and the United States through its climate capital unit.

Net interest income dips on lower rates, but outlook improved

Net interest income (NII) fell 3% to €920 million from €950 million in the first quarter of 2025, mainly due to lower interest rates, partially offset by an increase in average loan volumes. The bank’s net interest margin stood at 2.65%. Despite the dip, AIB continues to expect full-year NII to rise to €3.8 billion from €3.75 billion in 2025, helped by anticipated European Central Bank rate increases this year to combat inflation. Other income increased by 8%, driven by a gain on the sale of bond investments, which the bank reinvested into euro-area sovereign and agency bonds. Net fee and commission income decreased by 5% year-on-year.

Cost control and credit quality remain robust

Operating costs rose 2% in line with guidance, resulting in a cost-income ratio of 44%. The bank said overall credit quality remained robust, with only a small net credit impairment charge recorded in the first quarter. AIB’s approach to credit remains “conservative, comprehensive and forward-looking,” the bank stated. Chief financial officer Donal Galvin told analysts that the geopolitical turmoil has had “very little impact to date” on either borrowing or savings activity among customers. The fuel crisis has not yet led to an uptick in problem loans or affected loan demand or savings rates.

AGM disrupted by shareholder protest over tractor repossession

AIB’s annual general meeting on Thursday morning was briefly disrupted when a shareholder refused repeated requests from chairman Jim Pettigrew to yield the floor over 25 minutes, airing grievances about the repossession of a tractor. Two gardaí were called to remove the shareholder. Pettigrew, a Scottish financial services veteran, told remaining attendees: “I’ve done AGMs for 30 years and I’ve never had to do that.” The incident did not overshadow the bank’s positive trading update. Hunt reiterated that “notwithstanding the geopolitical uncertainty, the Irish economy continues to perform well and we remain confident in our outlook for 2026.”

Outlook: strong returns and strategic cycle finale

AIB remains on course to “deliver strong, sustainable returns to our shareholders as we progress through the final year of our current strategic cycle,” Hunt said. The bank’s full-year guidance remains unchanged, with expectations of continued growth in lending and income. The broader Irish economy continues to perform well despite global uncertainties, and AIB’s results indicate that the bank is well-positioned to support customers through its extensive branch network and digital channels. The strong pipeline of loans across multiple sectors provides a buffer against potential headwinds from the Middle East conflict and rising fuel prices.

The bottom line

• AIB's new lending surged 11% to €3.6bn in Q1 2026, with green lending making up 42% of the total.
• Net interest income fell 3% to €920m due to lower rates, but full-year NII is expected to rise to €3.8bn.
• The bank has seen little impact from the Middle East conflict on loan demand, savings, or credit quality.
• Operating costs rose 2% in line with guidance, and the cost-income ratio stood at 44%.
• AIB retains its full-year guidance and expects strong returns in the final year of its strategic cycle.
• The AGM was briefly disrupted by a shareholder protest over a tractor repossession, removed by gardaí.