April 29, 2020 / 4:10 PM / a month ago

UPDATE 1-AIB CEO says Irish banks working to extend loan breaks

* AIB loan repayment breaks jump to well over 40,000

* CEO does not expect further jump in mortgage breaks

* Sees material impact on mortgage volumes in 2020 (Adds details, quotes)

By Padraic Halpin

DUBLIN, April 29 (Reuters) - Ireland’s five retail banks are working towards extending loan repayment breaks for customers hit by the coronavirus crisis to six months from three months, Allied Irish Banks Chief Executive told Reuters on Wednesday.

Irish banks agreed last month on the short-term breaks for those affected and Colin Hunt told AIB’s “virtual” annual shareholder meeting on Wednesday that it had processed “well over” 40,000 applications from loan customers.

The breaks agreed by AIB, one of the country’s two dominant lenders and the largest mortgage provider, include 16,000 mortgages, 12,000 for businesses and 12,000 personal loans, Hunt told shareholders via conference call.

He later told Reuters by telephone that lenders hoped to make an announcement on the extension as soon as possible following ongoing discussions with regulators.

“The view of all my colleagues in other institutions is that we are going to need a second payment break... What I would like to see, and this is what we’re working towards as an industry, is having a further three-month period to bring us out to the end of September,” Hunt said.

“We won’t have a good feel for the proportion of people who took payment break one who are going to need support in the second payment break until we see the government’s proposals in relation to the transition back to normality,” he added.

All mortgage requests were fulfilled with a processing backlog largely cleared, Hunt told Reuters, adding that he does not expect a significant increase in applications either as “the vast bulk of the immediate economic impact has now been felt.”

The 40,000 breaks represent almost double the forbearance arrangements AIB had in place at the end of 2019, according to its annual results. Hunt said the bank was not in realm of restructuring the affected business loans at the moment or speculating on the likely future course of non-performing loans.

The three-month breaks do not impact customers’ credit record, or the banks regulatory reporting of the loans.

The pandemic has led to 7,000 of AIB’s 9,500 people working from home and Hunt, an economist and former policy adviser in Ireland’s finance department, said the crisis will accelerate changes in where bank staff are asked to work in the future.

He said the collapse in housing transactions would have a material impact on mortgage volumes in 2020 and that while it was too early to speculate on impact on property prices, the long-standing shortage of housing supply will remain broadly supportive of activity once normality resumes.

“We still have a structural under supply of housing and we still have those demographic pressures which have been such a prevalent feature of Irish life in recent years and they will reassert themselves. I expect they will reassert themselves particularly in the first-time buyers space,” he said. (Reporting by Padraic Halpin; Editing by Jon Boyle and Alexander Smith)

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