Irish bank AIB lifts guidance for third time this year

DUBLIN (Reuters) - Irish bank AIB Group lifted its full-year income guidance for the third time this year on Wednesday after a higher interest rate environment contributed to a "very strong" third quarter that it expects to continue in the final three months.

AIB, one of three high street left lenders in Ireland after two other rival banks exited the market, said its total income in the first nine months of the year increased by 70%, with net interest income (NII) up 95% year-on-year.

The bank, which had a 32% share of the Irish mortgage market at the end of September, now expects NII of more than 3.75 billion euros this year, raising a July forecast of 3.6 billion and an initial estimate of 3 billion euros in March.

It increased its net interest margin (NIM) forecast to above 3% from 2.70% and expects return on tangible equity (ROTE) in excess of 20% this year, well above its medium-term target of above 13%. The bank had forecast ROTE of around 20% in July.

AIB's NIM - a key metric that shows how profitable its lending is - stood at 3.08% at the end of September, while its fully loaded core tier 1 capital ratio - a measure of financial strength - rose to 16.2% from 15.7% three months earlier.

Analysts at Davy Stockbrokers said the consensus forecast for 2024 net interest income of 3.6 billion euros appears on the conservative side, based on Wednesday's trading update.

AIB's main rival Bank of Ireland last week lifted its guidance for the second time this year.

Ireland's two dominant lenders have benefited from higher rates and the decisions by KBC and NatWest to shut their Irish businesses and sell their loan books to the banks that continue to serve the market.

(Reporting by Padraic Halpin, Editing by Louise Heavens)