Total income decreased to €4.5bn in 2025, from €4.9bn a year earlier, primarily driven by lower interest rates, AIB said.
However, customer deposits increased 7pc to €117.2bn, total lending reached €72.3bn and new lending amounted to €14.7bn, of which 43pc was green, the bank said.
The share buyback combined with cash dividends means shareholders will get a total distribution of €2.25bn for the year, more than the entire profit for the year, at a time of heightened geopolitical uncertainty.
AIB’s chief executive Colin Hunt said the return of capital to shareholders was being done prudently, even though the conflict between the US and Israel had thrown the world into a fresh uncertainty.
The bank’s capitalisation was “well north of conservative”, he said.
The AIB results show Common Equity Tier 1 (CET1), a standard measure of a bank’s capital, was 16.2pc at the end of December, far above its regulatory requirements.
“We’ve got one of the strongest levels of capital of any bank in Europe,” he said.
AIB. Photo: Getty
News in 90 seconds – Wednesday, March 4
The outbreak of war in the Gulf region will have implications here, he said.
“We are dealing with an extraordinary level of uncertainty,” he said.
But on the ground in Ireland higher energy costs will weigh on growth and will increase prices. “Higher energy prices lower disposable incomes,” he said. AIB’s capital means it is positioned to continue lending, regardless of any economic shock, and it intends to, he said.
“It is in the bad days that banks need to step up,” he said.
The annual dividend is the first since the Government’s final exit from its shareholding in AIB last summer.
AIB said that reflects its strong financial position that also enables continued investment in the business.
“Notwithstanding geopolitical uncertainty, our focus remains on completing the final year of our current strategic cycle and planning for the future with confidence, underpinned by the trust placed in us by our 3.4 million customers and their communities whilst delivering sustainable returns to our shareholders,” Mr Hunt said.
AIB said net interest income (NII) last year was of €3.748bn, down 9pc. Net fee and commission income was up 4pc to €692m.
Analysts at Davy said the bank’s improved capital position enabled total distributions above forecasts.
“The investment case remains well supported by ongoing attractive capital generation and distributions and we retain our ‘outperform’ rating,” Davy said in a note to clients.
Meanwhile, Mr Hunt said AIB intends to be out of the traps early, when plans announced by Finance Minister Simon Harris for a new savings and investment account are developed.
“We have a working group established within the bank and we are building out the capabilities now,” he said. Mr Harris has said he intends to launch an incentivised savings scheme, likely to feature tax breaks versus mainstream accounts, over the coming two budgets.