Mr. Robert Mulhall:

I thank the Chairman and members for inviting AIB to appear before the Joint Committee on Arts, Heritage, Regional, Rural and Gaeltacht Affairs. We regard this as an important opportunity to explain the bank's role in the Irish economy and the community, particularly across the wide areas of responsibility covered by this committee.

Allied Irish Banks has over 2.2 million customers and 360,000 EBS customers. AIB group is deeply rooted in every level of the local community. As an example of its sheer reach and range, the banks spend more than €600 million a year in the purchase of goods and services from local Irish suppliers. A total of 60,000 customers use the 205 AIB branches every day. A further 7,000 customers visit our 71 EBS locations each day. Our close partnership with An Post, which has more than 1,100 offices around the country, provides daily banking services to 15,000 customers with approximately 4 million transactions expected to be recorded by the end of this year alone. These combined banking services amount to a remarkably embedded and widespread network across the country. Our 3,000 staff within the branch network are drawn from the community, bringing with them unique local knowledge and understanding of our customers and their needs.

The close relationship between AIB and its customers is crucial to its business and is at the heart of its planning. AIB is currently reorganising its banking model to work closer with customers, retail business and corporate customers. A total of 19 new local markets are headed with an individual leader responsible for AIB's overall engagement with customers in that region. The bank will organise around customers at a local level, eliminating duplication and unnecessary complexities in the system. This new structure provides customers with a one-stop-shop form of service and brings more local autonomy when it comes to decision making, including lending. It is designed to be more tailored to each customer's needs and will allow far more agility of service and will enable the AIB to move working capital faster and more efficiently through the economy.

Nobody is more aware than Oireachtas Members of the rapid changes in how people are managing their finances, both business and personal customers. Customers set the pace today and banks are required to respond. Customers expect a personal professional service, whether it is over-the-counter or through technology. Digital and technological usage provides convenience, personal security and competition that allows choice. The trend across Ireland, Britain and western Europe is a seismic move towards digital. For example, 76% of all AIB's personal loan applications are now done through the digital channels. Some 95% of customer transactions are automated. Nobody should imagine that this activity is conducted only by a younger generation of customers. The use of digital channels by older age groups is growing consistently also, regardless of geographical location. In line with European norms, banking online and through remote channels has been embraced across the country. Almost 50% of customers in rural counties are now using digital banking of one kind or another. At least 43% of the 500,000 banking transactions conducted daily are outside of normal banking hours and are executed over online and mobile channels.

We are keenly aware that the one thing that will differentiate banks such as AIB into the future is the quality customer service, whether it is in-branch, online or on mobile. That is the one constant that remains in spite of all other developments. We are aware that we must maintain the correct balance between providing our customers with a trusted personal one to one service and an accessible and reliable digital or mobile service. Last year AIB opened three new branches, one in Little Island in Cork, Carrickmines in Dublin and Grand Canal Dock near the city centre in Dublin. This year we opened the only in-store banking outlet in the Republic of Ireland through the SuperValu in Lucan. This new outlet adds to the growing number of flexible banking options available to our customers to use where and at a time of their choosing. Any company claiming to deliver market leading service must go to the customer. AIB is increasing its mobile sales force, trained staff who travel to meet customers where and when it suits their needs. In addition to the core opening hours, by the end of the year, AIB will be operating 20 bank lobbies across the country, providing a wide range of services, seven days a week from 8 a.m. until 9 p.m. Where there is a lack of physical bank branches, AIB operates community banks in rural areas of Cork, Kerry, Clare, Limerick, Tipperary, Mayo, Galway and Donegal. There were 40,000 over-the-counter transactions at these banks since the start of 2016.

In addition, students now have exclusive on-campus services in 13 universities and colleges, including in Waterford, Sligo, Dublin and Galway.

We mentioned AIB's partnership with An Post earlier and the banking services that are available in all An Post offices. This year alone, almost 4 million transactions will be processed in An Post for 400,000 customers, reflecting the flexibility, easy proximity and security that the post office service offers to bank customers. Personal customers can use any outlet of An Post to complete cash withdrawals. They can also lodge cash to their AIB accounts. AIB credit card bills and payments can be completed in post offices. Business customers can also avail of a large range of banking services at any post office, including cash lodgements and credit card bill payments to an AIB credit card.

With small to medium enterprise providing thousands of jobs across the country, AIB support for the SME sector is reflected in our strong lending activity. For the first three quarters of 2016, AIB has seen an 11% increase in the value of new money loan approvals and a 5% increase in the number of loan applications approved. The bank has committed to providing customers with a decision within 48 hours of their credit application up to €30,000. Since its launch in September 2014, 28,000 applications have been approved under the scheme. AIB has developed a sectoral approach to its business, analysing key components of the Irish economic landscape and building up specialised teams to provide expert opinion, guidance and advice to customers in those sectors, whether they are retail, hospitality, health, transport, technology, hospitality or farming. This strategy of building sectoral capability has been very effective, giving the bank a strong sense of awareness of customer needs. For example, the bank's agri team now includes 12 specialist advisers with front-line experience of farmers' needs and opportunities who can respond rapidly and pragmatically to issues such as flooding, price volatility and poor crop yields.

In response to the flooding crisis of last year, AIB opened an emergency flood response line for small businesses and farming customers and proactively contacted customers whose business finances might have been impacted by adverse weather. We offered customers a moratorium on loan repayments in order to free up cashflow for their businesses at that critical time. Following the full drawdown of our first €500 million agriloan fund, AIB launched a second €500 million agriloan fund at the end of 2015 to support the continued development of Ireland's farming sector. Recently, AIB has been engaged with the Department of Agriculture, Food and the Marine and the Strategic Banking Corporation of Ireland, SBCI, on the low-cost agri cashflow support loan scheme announced in the budget. AIB has a history of partnership with SBCI in helping small businesses and farmers to grow their businesses, creating employment and supporting the economy through reduced price loans. Since the launch of AIB's €400 million SBCI loan fund in 2015, which is available at 4.5%, a discount of 2% off our standard business rate, AIB has approved more than €5 million of credit each week to businesses and farmers. The average loan drawdown last year in this fund was €28,500 but loans drawn down ranged in size from €1,000 to €1 million. AIB relationship managers are continuing to proactively engage with dairy farming customers who may be experiencing cashflow pressures and the bank's agri adviser team has participated in numerous seminars, farm talks and workshops to support customers.

AIB is the largest bank seed fund investor in Ireland also and it is supporting businesses through the country irrespective of location. In Skibbereen, for example, the bank is the strategic partner of Ludgate, the first rural digital hub, providing 1,000 mb of broadband, 80 hot desks, co-working space for all small businesses and 24-7 access. Meanwhile, a strategic partner of the PorterShed in Galway, AIB is funding a shared workspace for entrepreneurs, start-ups, accelerators and incubators for the western seaboard. We have had a really positive response to the AIB Start-up Academy, which is a programme of supports for start-up business owners. This includes a range of summits, boot camps and a mentoring programme designed to inspire, support and nurture SMEs in critical initial phases of getting their businesses off the ground.

AIB Group has the largest share of the mortgage market, with our latest mortgage lending figures showing a 15% increase on last year's numbers. We approve eight out of ten applications and we have consistently been one of the cheapest in the marketplace. We have reduced our variable rates for both new and existing customers four times in the last two years, totalling a 1% reduction. Meanwhile, though impaired loans are dropping significantly as the economy recovers, there has been an €18 billion reduction in impaired loans to €11 billion since December 2013. The bank continues its case-by-case restructuring of personal and business customers in financial difficulty. Implementing sustainable solutions for customers takes time but progress is clearly being made and the bank continues to see a continued reduction in impaired loans. This remains a critical priority for the banking industry in general.

Regardless of our customers' locations, a new set of challenges has come unexpectedly from the Brexit vote. AIB is very conscious of the short-term negative effect of a weakened sterling. We continue to work with customers whose businesses are now experiencing cashflow challenges due to currency fluctuations. Brexit has also brought market uncertainty and volatility. As a bank we are acutely aware of the anxieties that many of our customers are facing, be they farmers in the west of Ireland or shop owners in the midlands. Some are under pressure and while we cannot predict the shape of the post-Brexit change we can, as a profitable and sustainable bank, assure the committee we will support our customers and jobs and continue to provide credit to businesses, which are the backbone of the Irish economy and the heart of communities. AIB is actively advising our customers to plan strategically on the impact of Brexit on their business. We are holding Brexit information events this month in Sligo, Limerick, Clare and Drogheda and there are more planned for the new year.

At the outset, we mentioned the degree to which the bank is involved in the community. Nowhere is this more highly illustrated than in our sponsorship of GAA club hurling, football andcamogie. The bank's relationship with the GAA spans more than 25 years and that support reaches into every one of our 2,000 clubs that engage in the championship, with many parishes and communities benefitting. In 2015, the bank extended its GAA sponsorship to include the all-Ireland football championship also.

AIB once again thanks the committee for the opportunity to explain the level of support and commitment we have to our customers, their families and the local community. This relationship lies at the very core of our business. Having returned to sustainable profitability and having begun repaying capital to the State, the bank is robustly positioned to continue that support no matter where our customers live or work. We are now happy to take questions.