Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I welcome Mr. Duffy and his colleagues and thank them for the statement and information they provided in advance of the meeting.

The representatives of all the banks which come before the committee in the weeks ahead will all be challenged strongly on the issue of standard variable rates. Three weeks ago, Fianna Fáil, as an Opposition party, dedicated its Private Members' time in the Dáil to a full debate on the issue of variable mortgage rates. I will put a number of matters to Mr. Duffy to which I ask him to respond.

Most people on a variable rate mortgage understand that the interest rate they pay will move in line with market conditions. When conditions are bad, they expect the rate to increase and when they improve, they expect the rate to reduce. The standard variable rate is not like the tracker rate, which is linked to the rate set by the European Central Bank. There are approximately 300,000 variable rate mortgage customers in Ireland, of whom approximately 140,000 are with Allied Irish Banks. These customers are paying far in excess of the variable rates charged elsewhere in the eurozone where the average variable rate is 2.09%. AIB is not the worst offender in this regard and the bank has reduced its rates recently. I commend it on reducing its variable rate for existing and new customers, especially as some other banks have existing customers paying a standard variable rate of 4.5%. These banks will be challenged on that matter.

The cost of funds to Allied Irish Banks is declining and currently stands at 1.57% according to the bank's figures. Its net interest margin is increasing and currently stands at 1.69%. Will Mr. Duffy take us through the sources of AIB's funds and the cost of each source? Customer accounts provide 63% of the bank's funding. What is the cost of this saver and deposit base?