AIB, Bank of Ireland and Permanent TSB should see their combined loan-loss charges dropping by 85 per cent this year to about €400 million as the economic impact of extended lockdowns has been less than feared, according to Davy analysts. Changes to international accounting rules since the financial crisis have resulted in banks front-loading provisions as economic conditions deteriorate, rather than waiting for defaults to actually occur. Defaults will riseThe analysts predict loan defaults will rise inevitably as a result of Covid-19. The forecasts do not incorporate any benefits from the planned exits of Ulster Bank and KBC Bank Ireland from the market. The three remaining banks are currently in talks to buy various parts of the of the exiting lenders’ loan books.

Source: The Irish Times June 02, 2021 14:15 UTC