2016 EU-wide Stress Test Summary
Core Information
- Bank Name: Allied Irish Banks plc
- LEI Code: 3U8WV1YX2VMUHH7Z1Q21
- Country Code: IE (Ireland)
Summary of Stress Test Results
Financial Performance (3-Year Cumulative)
| Metric |
Actual (31/12/2015) |
Baseline Scenario (31/12/2018) |
Adverse Scenario (31/12/2018) |
| Net Interest Income |
- |
5,779.89 mln EUR |
4,568.05 mln EUR |
| Gains or (-) Losses on Financial Assets |
- |
-3.52 mln EUR |
-246.16 mln EUR |
| Impairment or (-) Reversal of Impairment |
- |
-1,278.53 mln EUR |
-4,305.33 mln EUR |
| Profit or (-) Loss for the Year |
- |
853.36 mln EUR |
-2,994.60 mln EUR |
Capital Adequacy Ratios
| Metric |
Actual (31/12/2015) |
Baseline Scenario (31/12/2018) |
Adverse Scenario (31/12/2018) |
| Common Equity Tier 1 (CET1) Capital |
9,284.61 mln EUR |
10,111.66 mln EUR |
4,565.00 mln EUR |
| CET1 Ratio (%) |
15.9% |
17.0% |
7.4% |
| Fully Loaded CET1 Ratio (%) |
13.1% |
13.9% |
4.3% |
| Tier 1 Capital |
9,778.88 mln EUR |
10,605.92 mln EUR |
5,059.26 mln EUR |
| Leverage Ratio (%) |
9.2% |
10.0% |
4.8% |
| Fully Loaded Leverage Ratio (%) |
7.8% |
8.4% |
3.0% |
Total Risk Exposure Amounts
| Metric |
Actual (31/12/2015) |
Baseline Scenario (31/12/2018) |
Adverse Scenario (31/12/2018) |
| Total Risk Exposure Amount |
58,548.59 mln EUR |
59,568.72 mln EUR |
61,767.39 mln EUR |
Credit Risk IRB (Internal Ratings-Based)
Exposure Breakdown (31/12/2015)
| Category |
A-IRB (Non-defaulted) |
A-IRB (Defaulted) |
F-IRB (Non-defaulted) |
F-IRB (Defaulted) |
| Central banks and central governments |
0 |
0 |
10,345 |
0 |
| Institutions |
0 |
0 |
20,516 |
0 |
| Corporates |
0 |
0 |
9,464 |
1,499 |
| Corporates - Of Which: Specialised Lending |
0 |
0 |
334 |
9 |
| Corporates - Of Which: SME |
0 |
0 |
3,017 |
1,173 |
| Retail |
18,438 |
3,185 |
0 |
0 |
| Retail - Secured on real estate property |
18,438 |
3,185 |
7,169 |
2,175 |
| Retail - Secured on real estate property - Of Which: SME |
0 |
0 |
0 |
0 |
| Retail - Secured on real estate property - Of Which: non-SME |
18,438 |
3,185 |
7,169 |
2,175 |
| Retail - Qualifying Revolving |
0 |
0 |
0 |
0 |
| Retail - Other Retail |
0 |
0 |
0 |
0 |
| Retail - Other Retail - Of Which: SME |
0 |
0 |
0 |
0 |
| Retail - Other Retail - Of Which: non-SME |
0 |
0 |
0 |
0 |
| Equity |
0 |
0 |
0 |
0 |
| Securitisation |
0 |
0 |
8 |
0 |
| Other non-credit obligation assets |
0 |
0 |
8 |
0 |
| IRB TOTAL |
18,438 |
3,185 |
40,309 |
1,499 |
Coverage Ratio - Default Stock
| Metric |
Baseline Scenario (31/12/2018) |
Adverse Scenario (31/12/2018) |
| Coverage Ratio (%) |
40.57% |
45.39% |
Additional Information
- Mandatory Conversion Instruments:
- Total amount of instruments with mandatory conversion into ordinary shares upon a fixed date in the 2016-2018 period (cumulative conversions): 0
- Total Additional Tier 1 and Tier 2 instruments eligible as regulatory capital under the CRR provisions that convert into Common Equity Tier 1 or are written down upon a trigger event: 2,094 mln EUR
- Of which: eligible instruments whose trigger is above CET1 capital ratio in the adverse scenario: 1,600 mln EUR
Country-Specific Summary
Ireland
| Metric |
A-IRB (Non-defaulted) |
A-IRB (Defaulted) |
F-IRB (Non-defaulted) |
F-IRB (Defaulted) |
Stock of Provisions |
Coverage Ratio (%) |
| Total Risk Exposure Amount |
18,438 |
3,185 |
0 |
0 |
99 |
31.2% |
| Total IRB Exposure |
18,438 |
3,185 |
40,309 |
1,499 |
994 |
31.2% |
United Kingdom
| Metric |
A-IRB (Non-defaulted) |
A-IRB (Defaulted) |
F-IRB (Non-defaulted) |
F-IRB (Defaulted) |
Stock of Provisions |
Coverage Ratio (%) |
| Total Risk Exposure Amount |
30 |
18 |
0 |
0 |
0 |
34.5% |
| Total IRB Exposure |
30 |
18 |
2,568 |
13 |
0 |
34.5% |
Spain
| Metric |
A-IRB (Non-defaulted) |
A-IRB (Defaulted) |
F-IRB (Non-defaulted) |
F-IRB (Defaulted) |
Stock of Provisions |
Coverage Ratio (%) |
| Total Risk Exposure Amount |
1 |
1 |
1,180 |
2 |
0 |
33.1% |
| Total IRB Exposure |
1 |
1 |
1,180 |
2 |
0 |
33.1% |
Italy
| Metric |
A-IRB (Non-defaulted) |
A-IRB (Defaulted) |
F-IRB (Non-defaulted) |
F-IRB (Defaulted) |
Stock of Provisions |
Coverage Ratio (%) |
| Total Risk Exposure Amount |
0 |
0 |
0 |
0 |
0 |
0 |
| Total IRB Exposure |
0 |
0 |
0 |
0 |
0 |
0 |
France
| Metric |
A-IRB (Non-defaulted) |
A-IRB (Defaulted) |
F-IRB (Non-defaulted) |
F-IRB (Defaulted) |
Stock of Provisions |
Coverage Ratio (%) |
| Total Risk Exposure Amount |
0 |
0 |
0 |
0 |
0 |
0 |
| Total IRB Exposure |
0 |
0 |
0 |
0 |
0 |
0 |
Key Observations
- Capital Adequacy: Allied Irish Banks plc maintained a CET1 ratio of 15.9% in 2015, which improved to 17.0% under the baseline scenario but dropped significantly to 7.4% in the adverse scenario. This indicates a substantial risk to capital under severe conditions.
- Profitability: The bank showed a profit of 853.36 mln EUR in the baseline scenario but faced a loss of 2,994.60 mln EUR in the adverse scenario, highlighting the potential impact of stress on earnings.
- Credit Risk Exposure: The majority of the exposure is concentrated in the retail sector, particularly in secured real estate loans. The coverage ratio for default stock was relatively high in the adverse scenario for some countries, indicating better preparedness for potential defaults.
- Leverage Ratio: The leverage ratio dropped from 9.2% in 2015 to 4.8% in the adverse scenario, reflecting a more conservative capital structure under stress.
- Capital Eligibility: The bank had instruments that could convert to CET1 or be written down, but only 1,600 mln EUR of these were triggered in the adverse scenario, suggesting limited impact on capital ratios.
Conclusion
The 2016 EU-wide Stress Test reveals Allied Irish Banks plc's resilience in the baseline scenario but highlights vulnerabilities under adverse conditions. The bank's capital adequacy ratios declined significantly, indicating the need for robust risk management and capital planning. The exposure breakdown shows a concentration in retail and corporate lending, with the highest risk in the adverse scenario. The coverage ratio for default stock varied across countries, with some showing higher resilience. Overall, the test underscores the importance of maintaining sufficient capital buffers to withstand economic downturns.
