Ireland’s largest bank by assets said in a business update that it expected net interest income to rise by around 6-7% year-on-year, slightly higher in 2021 than its previous forecast.

AIB, the country’s biggest mortgage lender, last month predicted net interest income would rise to more than 15%, up from 10% previously forecast.

AIB is the only Irish bank to have raised mortgage interest rates without following suit since the ECB began raising rates at its record pace. Bank of Ireland and another high street creditor, Permanent TSB, are yet to budge.

Interest income at Bank of Ireland has grown by 3% since the start of the year as the ECB does not charge the bank negative rates for excess deposits.

It is expected to repay all of its cheap ECB funding this month, which would boost additional earnings by 30 million euros.

In addition to raising rates last month, the ECB changed the terms of its widely used long-term loan program, known as TLTRO-III, from November, encouraging banks to repay at least part of the money.

Bank of Ireland added that new lending has increased by 13% so far this year compared to 2021, including a 30% jump to Irish individuals, a 23% rise to businesses and markets and a 19% fall in the UK. Focus on value over volume.

“Overall business momentum is positive. The strength of our business model means we remain firmly on track for a sustainable return on tangible equity (RoTE) above 10% in the near term,” said Director General Acting General Gavin Kelly. A press release.